Markets Update - 8/26/26

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Quick Summary

• US equity indices started Wednesday modestly lower after reports on personal income and spending, inflation, and second-quarter GDP and as traders awaited the day’s main event in Nvidia earnings after the close.
• The July personal income and spending report did little to change the inflation picture. Headline and core PCE were unchanged from June on a year-over-year basis at 3.7% and 3.3%, respectively, while Fed hike odds briefly moved higher before returning near where they started.
• More positively incomes came in double expectations, driving the savings rate off 4-year lows, while spending was as expected, which was a relatively soft reading (no growth from June when adjusted for inflation).
• Indices would rise into positive territory during the first hour, before falling back to new session lows before recovering again in the afternoon. They would again make it into positive territory for the most part (the Dow was a laggard) before fading into the close. At day’s end, the S&P 500 finished roughly flat, the Nasdaq Composite and the Russell 2000 slipped 0.1%, while the Dow Jones Industrial Average fell 0.2%.
• The equal-weighted S&P 500 though gained 0.3%, even as only four S&P 500 sectors finished higher. Industrials led on broad strength, while Technology also helped despite Nvidia slipping ahead of its highly anticipated earnings report after the close which initially underwhelmed investors despite another strong report but shares have since turned higher after the CFO said the firm expected growth of 70% next year vs a Street estimate of 45% (more later on NVDA). The PHLX Semiconductor Index managed a small gain after a choppy session.
• Oil created some afternoon volatility after reports around Iran, Oman, and the Strait of Hormuz briefly pushed crude higher, but WTI ultimately finished little changed. Treasury yields were also little changed after Tuesday’s decline.
• Attention now turns to Nvidia’s earnings reaction Thursday and the start of the Jackson Hole symposium with numerous interviews with central bankers and commentators expected.

US equity indices started lower but rose into + territory in the first hour before falling back and setting new lows. They would rally in the afternoon, again mostly making it above flat, before falling back to finish mildly lower with the worst (DJIA) just -0.2%.

Market commentary

US equities

“As we go into Nvidia earnings, the VIX index is showing little sign of fear, sitting just above this year’s low. This juxtaposition signals broader stocks are vulnerable to potential swings. Nvidia remains the world’s most important stock when it comes to moving the needle for investor portfolios.” — Mark Cranfield, Markets Live strategist

An inflection point may be approaching, but consumers continue to benefit from income growth that’s outpacing inflation, according to Jeff Roach at LPL Financial. “For policymakers, the balance of risks still tilts toward inflation,” he said. “If geopolitical tensions ease in the near term, core inflation could fall below 3%, giving investors a reason for optimism.”

FOMC

“Given his approach to the June and July press conferences, we think it is unlikely that he would move straight to a deep dive into the current economic outlook and its implications for policy over the balance of 2026. Instead, we expect him to spend the bulk of his remarks on big-picture themes with an emphasis on the supply side and on how these topics will be addressed by the Task Forces,” Piper Sandler’s head of central bank policy Kurt Lewis wrote to clients.

“If Warsh really succeeds in not giving much direction on things, I think people are going to go, ‘What the heck is going on?’” said Ben Fulton, CEO of WEBs Investments. However, if Warsh actually offers some perspective there, Fulton thinks he will “probably bring some calm.” “It’s not a high conviction market right now,” he added. “We need to start seeing some clarity.”

“Today’s mild upside inflation surprise and relative economic strength weren’t necessarily what investors —or the Fed — wanted to see. It wasn’t enough to shift the balance for September’s FOMC meeting,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.

Stock and sector breakdown

The down session on the SPX Wednesday was despite Tech finishing modestly in the green at +0.4%, but only one of four sectors that finished higher (led by Industrials +1.1%) outweighed a bit by the seven sectors that finished lower although just Health Care finished down over 1%.

[BRIEFING.COM] The industrials sector (+1.1%) stood out on relatively broad strength within the group. Courier stocks were particularly strong, with C.H. Robinson (CHRW 151.73, +8.07, +5.62%) ranking among the top-performing S&P 500 components.

The information technology sector (+0.4%) also provided support despite weakness in NVIDIA (NVDA 209.95, -3.10, -1.46%) ahead of its earnings report. The PHLX Semiconductor Index (+0.2%) eked out a small gain following a choppy session, while software stocks were a relative bright spot despite post-earnings weakness in Intuit (INTU 345.88, -11.58, -3.24%).

Several company-specific developments remained influential elsewhere. The communication services sector (-0.7%) was among the laggards even as Meta Platforms (META 576.14, +6.09, +1.07%) finished higher following a volatile session. The stock fluctuated after the company reached a proposed settlement with a bipartisan coalition of state attorneys general over claims that Facebook and Instagram harmed younger users.

The consumer discretionary sector (-0.6%) also finished lower as NIKE (NKE 38.59, -0.89, -2.25%) and other athletic apparel stocks extended their retreat following Dick’s Sporting Goods’ (DKS 129.71, +5.40, +4.34%) disappointing earnings report Tuesday. There was a notable exception outside the S&P 500, as Abercrombie & Fitch (ANF 147.68, +38.78, +35.61%) surged following its Q2 beat, with encouraging underlying sales trends beyond a sizable tariff-refund benefit providing some support to other retail and apparel names.

Meanwhile, the health care sector (-1.0%) finished at the bottom of the sector standings as Moderna (MRNA 149.66, -9.17, -5.77%) gave back more of its gains following last week’s triple-digit surge on positive melanoma vaccine results, while Eli Lilly (LLY 1190.03, -43.63, -3.54%) was also a laggard.

[Note: % changes above may differ from chart as chart uses futures.]

$NVDA Nvidia shares are -1.9% after a strong earnings report with beats on the top and bottom lines and a raise to current quarter sales guidance above expectations at $108 billion, plus or minus 2%. Analysts were expecting guidance of $104.2 billion.

Nvidia said its outlook includes no data center sales from China.

However, the margin forecast came in a little light at between 73.5% and 74.5%, versus analyst estimates of about 75%. Some estimates were as high as 76.5%.

Nvidia reported revenue of $96.2 billion for the July quarter, up 106% from a year ago and ahead of expectations for $92.3 billion, according to analysts tracked by FactSet. The chip maker reported adjusted earnings of $2.22 per share, also topping estimates for $2.09.

Scratch that. $NVDA Nvidia shares now higher by nearly 4% catalyzed by the CFO saying revenues would be increasing 70% next year vs a Street estimate of 45%.

“Incredibly, we are seeing demand acceleration even at our scale. Customers forecasts point to our growth doubling next year. However, as I mentioned earlier, we expect to grow approximately 70% as we are supply constrained. Nvidia compute is fully utilized across every cloud we serve the economic value it generates for our hyperscale, neo cloud and AI lab partners keeps rising.”

In that regard Nvidia reported today Amazon will add an additional 2 million Nvidia Corp. graphics processing units to its data center fleet in the next two years, a sign that the company remains committed to the AI hardware.

Also helping was the company addressing “circular financing” concerns – “We believe these investments measured against the strength of their demand, the business they create for us, the ecosystem they build on Nvidia’s platform, and the equity returns on our invested capital will be excellent and our risk is limited.”

$CRM Salesforce soaring 14% after raising revenue guidance and backlogs for the current quarter above expectations.

Sales will be about $11.5 billion in the fiscal third quarter, which ends in October, Salesforce said Wednesday in a statement. That’s just ahead of analysts average estimates, according to data compiled by Bloomberg. Current remaining performance obligations — a measure of future sales — will increase about 14%, also ahead of the average estimate of 13% growth.

The company expects revenue to accelerate in the second half of the year, even without the impact of acquisitions, Chief Financial and Operating Officer Robin Washington said in the statement. Net orders are at the strongest they’ve been in four years, she said.

Annualized revenue from Agentforce AI products topped $1.5 billion, up 240% year over year. The growth rate a quarter earlier was over 200%.

The prior quarter's earnings were boosted by a $2.6 billion gain on investments from a stake in artificial intelligence startup Anthropic. The company announced Claudeforce, a plugin for Anthropic’s Claude that can compose emails on behalf of salespeople, arm them with information and update records through chat.

$NKE Nike approaching -40% YTD (-75% from its all-time highs in late 2021) at the lowest levels since August 2014.

With the weaker sector breadth the number of large SPX winners (up over 3%) fell back to 18 from ~30 continuing to remain very subdued (they were 16 Monday, ~30 Friday). Large losers (down over 3%) have been even less volatile, Wednesday coming in at 7 from 17 Tuesday ~30 Monday.

After-hours movers

Okta – Shares surged 19% after the company’s second-quarter results exceeded analyst expectations.

Agilent Technologies — The medical technology stock jumped 4% on a stronger-than-expected revenue report for its third quarter.

CrowdStrike Holdings — Shares increased 10% after the global cybersecurity company beat consensus on revenue and earnings per share.

Everpure — The storage provider’s stock rose about 2% after surpassing Wall Street’s second-quarter outlook.

Veeva Systems — The cloud solutions stock jumped 8% on a better-than-predicted second quarter when looking at both lines on a non-GAAP basis.

Urban Outfitters — The retailer tumbled 3% despite reporting earnings and revenue in-line with consensus estimates for the second quarter, according to FactSet.

Synopsys — The engineering solutions stock fell 2% despite raising its annual revenue and profit forecasts.

Other corporate news

CrowdStrike Holdings Inc. forecast revenue figures for the full year that exceeded analysts’ estimates, evidence that the cybersecurity industry continues to see demand driven by threats from artificial intelligence.

Salesforce Inc. gave an outlook for strong revenue expansion, reassuring investors that the software company can compete successfully in the AI era.

HP Inc.’s investors looked past a widely expected boost in the company’s profit forecast and worried about future demand for computers and printers.

Meta Platforms Inc. said it agreed to pay up to $18 billion in landmark settlements to resolve social media claims from US states that would require the company to make major changes to how it operates platforms like Facebook and Instagram.

Anthropic PBC has agreed to spend $45 billion to rent AI cloud computing power from Nscale’s flagship data center development in West Virginia, the latest move in an effort to secure capacity for its expanding business in advance of going public.

Abercrombie & Fitch Co.’s revenue topped estimates and the retailer raised its annual earnings guidance, suggesting the apparel company is regaining momentum

Note on all charts the colored lines are moving averages (the average price over the lookback period (days on the daily charts, weeks on the weekly charts)): 20 = green 50 = purple

100 = blue 200 = brown

Exception is monthly charts where blue is 10-month moving average and brown is 20-month moving average.

MACD = Moving average convergence/divergence line, a measure of momentum that compares longer term and shorter term momentum to gauge if a move is strengthening or weakening. This is probably my favorite individual indicator (it’s also the favorite of Katie Stockton, a very fine technician).

RSI = Relative Strength Index (basically what it sounds like) = measures the strength of the move comparing gains to losses over the given lookback window (I use the standard 14 periods).

Turning to the charts, another tight range for the SPX which remains right around its rising 20-DMA. As noted Thursday though the SPX along with the other three indices below have seen their MACD cross over to “sell longs” positioning.

Nasdaq Composite also a tight range just below its 20-DMA above its 50-DMA.

The Russell 2000 (RUT) also just under its 20-DMA above its 50- DMA.

The equal-weighted SPX the highs of the week but overall little changed just off all-time highs above all support levels.

Treasury yields rose across the curve Wednesday after falling the prior three sessions:

Two-year Treasury yields up four basis points to 4.21%. They are 22 basis points below the peak close July 23rd, which was the highest since February of last year.

They are ~55 basis points above the Effective Fed Funds rate (red line), continuing to call for rate hikes.

10-year yields up three basis points to 4.65% from the lowest close since Aug 5th.

30-year yields up one basis point to 5.17% from the lowest close since July.

After the strong 2-year auction Tuesday, the second of this week’s coupon auctions came today in $70B of 5-year notes, and it was another solid auction, although it did tail (yield above expectations) but that is nothing new for this maturity.

The sale came at a clearing yield of 4.393%, down slightly from 4.408% in July though still at the high end of the past few years, but unlike the 2-year which came in below expectations, the 5-year tailed (came in above expectations) by +0.2bps. While better than the 6-mth avg of +0.7bps, it was the 10th straight tail for this duration and, per ZeroHedge, the 15th consecutive auction without a stop-through.

-Overall demand (bid/cover) rose to 2.37, the highest since November 2025, from 2.28 in July and above the 6-mth avg of 2.32.

-Indirect (mostly foreign) demand improved to 61.5% from 59.2% in July but stayed below the 6-mth avg of 65.4%, a notable contrast to the 2-year where foreign buyers surged.

-Direct (domestic) bidders picked up the slack at 28.4%, the most since January, from 27.2% in July and well above the 6-mth avg of 21.2%.

-That left dealers with just 10.0%, the lowest since December, down from 13.5% in July and well below the 6-mth avg of 13.4%.

@investingLive_’s Greg Michalowski gave it a B, compared with the B+ he gave the 2-year (see attached post), while ZeroHedge called it “solid, if notably weaker” than the 2-year.

We’ll get 7-years tomorrow.

The move higher in bonds (lower in yields) comes as @dailychartbook notes in their nightly email that, like BofA, Goldman sees CTAs as meaningfully short Treasuries.

So short in fact a “jump” in bond prices would see short covering at “the highest on record”.

Bessent Treasury put

“Treasury Secretary Scott Bessent’s surprise plan to tamp down US borrowing costs by expanding bond buybacks may have sparked fierce debate about its ultimate effectiveness, but key market metrics and positioning show that it’s having an impact.”

“This new Treasury ‘put’ improves the asymmetry of owning the long end by providing a potential light backstop,” said Jason Williams, head of US rates strategy at Citi. Bessent’s recent actions, including the increased buybacks as well as yen intervention, “all point to someone ready to do whatever it takes to achieve their goals.”

VIX fell slightly to 15.2. The indicator is in its “normal” range post-GFC, consistent with ~0.95% average daily moves in the SPX over the next 30 days.

24. VIX closing range. “There are still five trading days left in the month (including today), but if the current range holds, it would be the third narrowest high-low closing range for the VIX during the month of August since 1990.”

The VVIX (VIX of the VIX) edged back to 85.2, the lowest close of the year.

The current level is consistent with “moderate” daily moves in the VIX over the next 30 days (historically, normal is 80-100, but we’ve been above 90 most of the time since July ‘24). Above 100 is the level flagged by Charlie McElligott as indicating higher stress.

With NVDA earnings entering the “next session” window, as expected the 1-day VIX jumped to 12.9 from 8.4 Tuesday, the second lowest reading (after last Monday’s) since the first week of January. The current reading is consistent with a move of 0.81% in the SPX next session.

WTI up for the first time this week +1% remaining in the middle of its range over the past month.

The DXY dollar index (which is fixed weighted with a heavy (57%) weighting vs the euro), made it to the 200-DMA area again, but this time closed right on it.

The daily MACD as noted three weeks ago flipped to quite negative while the RSI was under 40 (and is again, was actually under 30 a week ago, the most oversold since January). As noted Thursday, the path lower from here is the easier one, but it’s been holding in remarkably well, and the technicals are starting to turn more favorable.

Gold futures (/GC) eased back as they continue their consolidation. As noted at the start of the month “still has a good technical setup with positive daily MACD and RSI,” and that remains the case.

US copper futures (/HG) started higher but reversed lower falling back to the 20-DMA, remaining in its uptrend from March (in addition to its longer term uptrend running to February 2020). Technicals are mixed.

US natural gas futures (/NG) ran higher to the 100-DMA before falling back, still the highest close in a month. The daily MACD as noted two weeks ago flipped to more bullish and the RSI is now over 50. That said, as I have mentioned for the past month it has layers and layers of resistance above.

Bitcoin futures held in a little better than gold so far in their consolidation little changed the past two days. Daily technicals remain strongly positive.

Misc

In terms of equities, Goldman sees CTAs with little demand but potentially “moderate” supply:

“Flow forecasts are quiet and we anticipate baseline demand will remain low. That said, a sustained downward move could potentially lead to a moderate amount of CTA supply”.

In terms of the SPX:

Over the next 1 week... Flat tape: Buyers $0.04B into the SPX Up tape: Sellers $0.56B out of the SPX Down tape: Sellers $5.29B out of the SPX

Over the next 1 month... Flat tape: Buyers $0.70B into the SPX Up tape: Buyers $2.91B into the SPX Down tape: Sellers $49.35B out of the SPX

BofA like Goldman’s prime desk saw hedge fund selling last week but also from retail (fourth straight week) and institutions (turning their 4-week average negative for the first time since early July) leading to overall net selling for the first time in 8 weeks.

MarketWatch: Michael Kramer at Mott Capital management points out that the Cboe Semiconductor ETF Volatility Index (ticker VXSMH) a VIX-style estimate of the expected volatility for the VanEck Semiconductor ETF (SMH), has hit its lowest level since August 14, near its lowest since January.

But this could be a problem, Kramer thinks: “With semis and the index starting to be priced to move together, there is less cushion from the rest of the market. So if semis drop after Nvidia reports, they are more likely to take the S&P 500 down with them.”

From @C_Barraud's Tuesday Brief is a post from TrendForce (Taiwan based tech market intelligence company) with some dramatic numbers estimating that two-thirds of cloud service providers (CSPs) cap ex is going to memory:

“TrendForce estimates that DRAM and NAND Flash combined will account for 47% of CSPs’ total CapEx in 2026, with their share rising further to 68% in 2027.”

“Server DRAM—a key procurement category for CSPs—saw contract prices rise by a cumulative 64% in 2H25, with a further jump of approximately 270% expected in 2026. Meanwhile, a similar trend is unfolding in NAND Flash, with enterprise SSD prices rising by around 35% in 2H25 and projected to surge by a cumulative 235% in 2026.

“Some long-term agreements (LTAs) signed from 2Q26 onward have included price ceilings that could limit further increases. Nevertheless, HBM contract prices could still rise by 70–140% in 2027.”

The Atlanta Fed's Q3 real GDP tracker ticked back up to +4.61% as of August 26th, up from +4.03% on August 18th but still down from the +5.83% peak on August 6th, with the gain since the last update driven by the contribution from consumption (to +2.10% from +1.69%).

As a reminder, both Q1 and Q2 started very strong before falling sharply as we approached those actual GDP reads.

The reading for now remains above the blue chip consensus* of ~+2.3%, though that has been rising while the Atlanta Fed measure has been easing.

Here's the breakdown of the components as of August 26th and changes from my last update August 18th:

Consumption = +2.10% (+0.41%)

Inventories = +1.71% (-0.02%)

Nonresidential fixed investment (biz spending) = +0.91% (+0.08%)

Gov't = +0.18% (-0.01%)

Net exports = -0.14% (+0.05%)

Residential investment = -0.17% (+0.05%)

GDPNow Forecast: +4.61% (+0.58%)

*The top (bottom) 10 average forecast is an average of the highest (lowest) 10 forecasts in the Blue Chip survey.

**(as a reminder their Q2 estimate came in very close at less than a tenth off after their Q1 estimate came in -0.75% too low and their Q4 estimate came in +1.5% too high (both due mostly to not adjusting federal spending appropriately for the shutdown), while Q3 was eight tenths low, but was along with Goldman’s the closest of the trackers for that quarter. Q2 2025 came in just a tenth low (and right in line in Q3 & Q4 ‘24, and a tenth off for Q2 ‘24), but was -1.2% too low for Q1 ‘25)

MS notes the difference between their estimate and the Atlanta Fed is “primarily is in inventory investment: they have a sharp rebound contributing 1.7 pct pt to 3Q real GDP growth; we have no boost.”

“Indeed, low real inventory/sales ratios suggest the possibility of faster restocking. When that restocking happens, and whether it comes through imports or domestic production will be important for GDP.”

Wrap-up

I said yesterday:

I mentioned Monday that the Tech sector had seen the longest losing streak since the early days of Covid, and so it wasn’t a huge surprise that we saw a bounce. The question remains whether it is just that or something more. It will be hard to get a good feel for that tomorrow with Nvidia earnings looming after the close, but that should serve as a clearing event one way or the other.

But as I also said in the Week Ahead “the broader strength Friday was good to see and hopefully continues into the upcoming week,” and noted Monday “despite some major catalysts for the non-tech trade this week, we saw just that consistent with my overall conclusion that ‘otherwise, things remain tilted positively.’” We’ll see if that trade can continue into Wednesday as well. The morning data (particularly the personal income and spending along with PCE prices) will likely have some influence.

And perhaps it was the “looming” Nvidia earnings, or maybe the rise in yields and oil, or even the weakish July consumption data, but for whatever reason traders weren’t pushing things too far in either direction Wednesday.

And I noted today I was hopeful that with Nvidia not seeing its usual pre-earnings strength we might get a better reaction to its typical beat-and-raise…

While $NVDA has fallen the past four earnings releases, and on average according to Citigroup via BBG “2.8% on the day of the event, an underperformance that extends into a 1.5% decline in the following month,” they also note that “over the past eight quarters, Nvidia has had an average gain of 4.2% in the month before earnings.”

In this case NVDA is up just 1.4% over the past month (and is -6.6% from its high August 17th) so perhaps we’ll get a better result?

…and as noted earlier, while it seemed that investors would keep picking at the negatives (margins, balance sheet, etc.), in the call it looks like that has turned around. In the past the market has been weak the day after Nvidia reports, so we’ll see if Nvidia can keep the gains into tomorrow’s session and change that pattern tomorrow.

That said, it might overall be another tentative session with Chair Warsh’s Jackson Hole speech now looming on Friday morning.

The Day Ahead

Things cool down Thursday before heating back up Friday.

In US economic data we’ll just get June goods trade balance and weekly unemployment claims.

In terms of Fed speakers, nobody is on the calendar, but you can bet there will be plenty of interviews of central bank policymakers from the Jackson Hole symposium starting tomorrow.

In non-Bill (>1yr maturity) US Treasury auctions we’ll wrap up with 7- years.

In terms of SPX Q2 earnings we’re really into the wrap-up phase now although still with eight SPX components reporting and one (MRVL) over $100B in market cap.

Ex-US highlights are a Bank of Korea meeting, ECB minutes, Germany consumer confidence, China industrial profits.

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From Christophe Barraud

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Thursday August 27

Data: US July advance goods trade balance, wholesale inventories, August Kansas City Fed manufacturing activity, initial jobless claims, Germany September GfK consumer confidence, France July PPI, Eurozone July M3, Canada Q2 current account balance, China July industrial profits, Norway Q2 GDP

Central banks: Jackson Hole symposium (through August 29), BoJ’s Himino speaks, ECB’s account of the July meeting

Earnings: Marvell, Toronto-Dominion Bank, Autodesk, Workday, Affirm, Dollar Tree, Pernod Ricard, Rubrik, Best Buy

Auctions: US 7-yr Notes ($44bn)

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