US Stock Market: Nvidia earnings, Jackson Hole to test strength of AI-led stock rally

Nvidia’s earnings report and the Federal Reserve’s Jackson Hole symposium are set to test the assumptions underpinning this year’s stock market rally, as investors assess whether the artificial intelligence-driven surge in equities can withstand rising uncertainty over economic growth and interest rates, according to a report by Reuters.

Global bond yields surged last week, with the 30-year U.S. Treasury yield climbing to its highest level since 2007. The sharp move has pressured stocks and raised concerns about borrowing costs for households and companies investing heavily in AI infrastructure.

The U.S. Treasury Department’s decision to double buybacks of long-dated debt provided only temporary relief, with yields rebounding on Thursday. That has heightened investor focus on the August 27-29 Jackson Hole gathering, where Federal Reserve Chair Kevin Warsh is expected to provide clues on monetary policy at a time when the central bank has moved away from traditional forward guidance, as per the report by Reuters.


The S&P 500 was down last week and remained about 2% below its record high. Rising Treasury yields have intensified concerns about financing costs, weighing particularly on semiconductor stocks. The Philadelphia Semiconductor Index was down about 5% for the week.

Nvidia earnings in focus

Nvidia, whose chips are central to the global AI infrastructure buildout, is scheduled to report its second-quarter results on August 26. The company has increasingly become a bellwether for the wider AI ecosystem, including chipmakers, data-centre operators and companies financing the expansion of computing capacity.

Investors will look to Nvidia’s results for fresh evidence of whether demand for AI infrastructure remains strong enough to justify the sector’s elevated valuations.

Nvidia has also partnered with six major financial institutions on financing platforms targeting more than $500 billion for AI infrastructure, underscoring the enormous capital requirements associated with the expansion of data centres and AI computing capacity.

Warsh's Jackson Hole debut

At Jackson Hole, investors will closely monitor Warsh’s approach to monetary policy. The event will mark his first appearance at the annual symposium since taking office in May 2026.

Warsh’s decision to reduce reliance on traditional forward guidance has left investors with fewer signals about the likely path of interest rates. His appearance could therefore provide an important indication of how he intends to communicate monetary policy and establish the framework for his tenure.

The Fed’s July meeting offered limited clues about how policymakers might respond if inflation remains elevated, adding to market uncertainty.

Investors will also have fresh economic data to consider ahead of the symposium, including July personal consumption expenditures inflation, the Fed’s preferred inflation gauge, and updated figures on U.S. economic growth. The data could significantly influence expectations for the path of interest rates.

Markets are currently pricing in a 35% probability of a September rate hike, with the odds rising to 66% by December.

U.S. Treasury yields rebounded on Thursday, reversing much of the previous day’s decline despite the Treasury Department’s efforts to improve liquidity in long-dated government debt.

The shift away from forward guidance could eventually reduce investors’ tendency to treat Fed signals as commitments, but it may also increase short-term volatility as markets are forced to reassess the interest-rate outlook more frequently.

For equities, the combination of Nvidia’s results and Warsh’s Jackson Hole debut could therefore provide a crucial test of whether the AI-led rally can continue in an environment of higher borrowing costs, persistent inflation risks and growing uncertainty over monetary policy, the report stated.