August 26, 2026, (Inside AI) — U.S. stock futures barely moved early Wednesday as traders braced for two market-moving events: Nvidia's quarterly earnings and the Federal Reserve's preferred inflation gauge. The Personal Consumption Expenditures report is expected to show price pressures climbed to 3.6% in July, a figure that could reshape rate expectations.
Futures tied to the S&P 500 slipped 7.5 points, or 0.10%, while Nasdaq 100 futures fell 76.25 points, or 0.26%. Dow E-minis edged up 31 points, or 0.06%. The muted moves reflect a market holding its breath before Nvidia's results, widely seen as the next major test of the AI-fueled rally.
Nvidia has become the bellwether for AI-related stocks. Its recent underperformance relative to other U.S. semiconductors signals growing unease about the sustainability of the AI investment boom. The company's shares rose 0.2% in premarket trading, but any sign of slowing growth could rekindle doubts and set the tone for markets through the rest of the week.
Marc Ostwald, chief economist and global strategist at ADM Investor Services, captured the tension.
"Nvidia has long become the bellwether for AI-related stocks, and its recent underperformance relative to other U.S. semiconductors (is) a clear signal of market concerns about the AI investment related boom," Marc Ostwald, chief economist and global strategist at ADM Investor Services.
Ostwald also warned that a cutback on cyclical spending and concentration of Nvidia's revenue streams could overshadow even robust results. A bumper earnings report might deepen the divide between software stocks, which have struggled this year, and semiconductors, which have capitalized heavily on AI euphoria.
That divide was on display Wednesday. Shares of Intuit dropped 11.7% after the TurboTax maker forecast annual revenue below Wall Street expectations. Other software names came under pressure too: Adobe fell, while ServiceNow and Atlassian each lost more than 2%.
Inflation Data Tests Rate Cut Expectations
Traders have priced in one 25-basis-point rate hike in 2026, according to LSEG data. An in-line consumer inflation reading has already lowered the odds of a September increase. The PCE report, due later Wednesday, will either reinforce that view or force a repricing.
A second estimate of economic growth is also scheduled for release. The combination of inflation and growth data lands just two days before Fed Chair Kevin Warsh speaks at the Jackson Hole symposium on Friday. Investors will parse his words for clues on the central bank's rate path.
Kevin Thozet, investment committee member at Carmignac, outlined the stakes.
"A dovish surprise, focused on weakening growth or labor market risks, would see lower real bond yields, dollar weakness while equities could fare well," Kevin Thozet, investment committee member at Carmignac.
Thozet added that a hawkish surprise, with explicit concern over inflation or a willingness to hike, would push short-term yields higher. A speech leaving investors unconvinced would intensify pressure on the long end of the yield curve.
Geopolitics and Treasury Moves Shape Sentiment
Broader risk appetite got a modest lift after Iran said it restarted talks with Oman to manage the Strait of Hormuz. That development eased some concerns about energy supply disruptions, though oil prices remain a wildcard.
Worries over higher-for-longer oil prices, rising government debt, and inflation expectations pushed Treasury yields to multi-year highs last week. Yields retreated after the Treasury announced support measures, but the relief was short-lived. Higher yields hammered tech stocks earlier in the week before a recovery in the previous session helped Wall Street close higher.
Earnings from a slew of consumer companies will also be parsed Wednesday. The uncertain macro environment has left markets sensitive to any data surprise, making Nvidia's report and the PCE print the twin pillars of this week's trading.
