Oil Plunge and Nvidia Expectations: What Has the U.S. Stock Market Priced In?

The U.S. stock market advanced in tandem on August 25 (local time; early morning August 26 in Korea) as oil prices and interest rates both declined. The S&P 500 rose 0.32% to 7,677.28, the Dow added 0.30% to 53,577.40, and the Nasdaq gained 0.66% to 26,151.30. Brent crude plunged 3.6% to $87.27 a barrel, and the 10-year U.S. Treasury yield fell from 4.70% to 4.63%, easing inflationary and further tightening concerns and fueling a broad relief rally across equity and bond markets. The consumer confidence index dipped slightly to 89.4, and housing‐related indicators also showed signs of cooling, but investors interpreted this as a ‘good slowdown’ of an overheated economy and maintained their preference for risk assets.

On the Fed front, with Chair Kevin Warsh set to deliver his first keynote speech at this week’s Jackson Hole symposium, markets have priced in the expectation that interest rates will remain on hold for now while reaffirming a data-dependent stance. At the same time, semiconductor and AI-related stocks rebounded strongly ahead of Nvidia’s earnings report on the 26th, leading the Nasdaq’s advance. Geopolitical and policy risks—such as energy and inflation volatility from the Iran war, the U.S. Treasury’s expanded long-term bond purchases, and U.S.-Canada trade tensions—remain elevated, but today’s session saw a partial unwinding of short-term risk premiums through the drop in oil prices and stabilization in rates, resulting in a day driven by ‘data slowdown + policy wait-and-see + Nvidia momentum.’