Reasons Behind the U.S. Stock Market's Pause Despite NVIDIA's Earnings Surprise

On the 26th (local time), the New York stock market was virtually unchanged. The S&P 500 fell 0.02% to 7,675.70, the Dow dropped 0.2% to 53,463.88, and the Nasdaq declined 0.1% to 26,130.20 at the close.

Intraday, the Fed’s preferred personal consumption expenditures (PCE) price index registered a year-over-year increase of 3.7%, slightly above the market forecast of 3.6%, stoking concerns over “sticky inflation.” As a result, the 10-year Treasury yield rose marginally to 4.65%, and federal funds futures still point to at least one rate hike by year-end.

Investors appear to be in a holding pattern ahead of Fed Chair Kevin Wash’s Jackson Hole speech on Friday. There is a strong belief that the Fed’s guidance on future rate paths will necessitate a broad reevaluation of both bonds and growth stocks.

After the close, AI bellwether Nvidia announced second-quarter results, reporting revenue of $96.2 billion and earnings per share of $2.22, both beating analyst estimates. Its guidance for next quarter revenue—projecting approximately 90% year-over-year growth—underscored the ongoing strength of AI infrastructure investment. In after-hours trading, the stock climbed over 4%, marking it as a key driver for the AI and semiconductor sectors in the next session.

Among individual stocks, Abercrombie & Fitch and J.M. Smucker surged on strong earnings, while Intuit fell after its profit-growth outlook disappointed. Meta closed up around 1%, reflecting eased regulatory risk after news of a large settlement in a U.S. teen protection lawsuit.

On the global front, despite supply-disruption concerns over a U.S.-Iran conflict, Brent crude retraced from recent highs near $94 to $86.94 a barrel, somewhat easing inflationary pressures. However, uncertainty over when Gulf maritime traffic will resume means energy and defense-related volatility will remain key factors for U.S. equity investors.