Nvidia Earnings and Inflation Data Weigh on Tech Stocks

The S&P 500 and Nasdaq indices are set to open lower on Wednesday following hotter-than-expected inflation data. The Personal Consumption Expenditures index rose 3.7% annually in July, slightly above estimates of 3.6%. Core PCE increased 3.3% in the same period, in line with forecasts.

The data has pushed up expectations for a September interest rate hike to about 40%, according to LSEG data. Jeff Buchbinder, chief equity strategist at LPL Financial, said inflation remains sticky and is temporarily driving up interest rates.

Investors will be closely watching Nvidia's quarterly earnings update as a test of the AI-driven rally. A stellar report from the chip heavyweight could deepen the divide between software stocks that have taken a beating this year and semiconductors, which have capitalized on the AI euphoria.