Chip Stocks Drag Markets Lower as Nvidia Earnings Loom

The Dow Jones Industrial Average rose 0.28% on Monday, August 24, 2026, while the S&P 500 fell 0.18% and the Nasdaq fell 0.38%, with technology stocks again weighing on the index. Reuters

MSCI's global equities gauge was lower, as weakness in technology stocks offset support from a dip in U.S. Treasury yields and falling oil prices. Reuters Treasury yields are the interest rates the U.S. government pays to borrow; when they fall, they typically give a boost to stocks, especially growth-oriented ones. Oil prices also declined, which normally helps equities by easing cost pressures on businesses and consumers. But neither tailwind was enough to counter the drag from semiconductors and AI-related names.

The split performance — the Dow up while growth-heavy indices lagged — is the latest expression of a rotation pattern that has intensified through the summer as semiconductor valuations have come under sustained pressure. The Dow's lighter weighting in tech explains why it held up better than the Nasdaq, which is heavily loaded with technology and growth stocks.

The selloff in chip stocks has been building in waves. On June 5, 2026, a global chip selloff erased more than $1 trillion in stock market value, hitting AI heavyweights including Nvidia. Reuters By late July, the Philadelphia Semiconductor Index (SOX) — a benchmark tracking 30 of the largest U.S.-listed chip companies — had extended its losses, falling 2.2% in a single session and sitting 21% below its record high close on June 22, 2026, though still up 63% year-to-date. Reuters In that same late-July rout, chip stocks shed approximately $1 trillion in market value, with Nvidia, SK Hynix, and TSMC each losing more than $100 billion. Nvidia alone saw a $238 billion decline in market capitalization. CNBC

The selling has not been confined to semiconductors. On Tuesday, August 18, 2026, broader technology stocks sold off alongside rising bond yields, with the Dow falling 0.22%, the S&P 500 down 0.69%, and the Nasdaq dropping 1.33%. Reuters U.S. stock index futures were stable on August 19 following that tech-driven slide, but the respite proved narrow. Reuters

Two catalysts now frame the near-term picture. Markets are awaiting Nvidia (NVDA.O) results, with the AI giant expected to be a key driver of market direction. Reuters That earnings report lands against a backdrop where geopolitical risk continues to seep into the pricing of rates, crude, and risk appetite. U.S. Bank reported that the Iran conflict and the Russia-Ukraine war continued to shape global markets through oil prices, shipping routes, trade policy, and inflation in 2026. U.S. Bank

The Nvidia result carries particular weight given the stock's role as the bellwether for the AI capital expenditure cycle — meaning investors treat it as a proxy for how much companies are spending on artificial intelligence infrastructure. A $238 billion single-session rout in the stock in late July, followed by the broader $1 trillion wipeout across chip stocks, means positioning into the report is likely polarized. Bulls can point to the SOX still being up 63% on the year; bears can point to the 21% drawdown from the June 22 high and the fact that two separate trillion-dollar selloffs have hit the sector in under three months.

The broader context here is what the cross-asset picture reveals about the nature of this selling. Falling Treasury yields and declining oil prices on August 24 would ordinarily be tailwinds for growth equities, which tend to be sensitive to borrowing costs and energy prices. That they failed to offset tech weakness suggests the selling in semiconductors and AI-leveraged names is driven by something specific to the sector's earnings and valuation dynamics rather than a broad market risk-off move. The Dow's positive close, driven by its lower tech weighting, reinforces that read.

What remains unresolved is whether Nvidia's results can arrest the drawdown or confirm it. The stock has been the single largest contributor to both the AI rally and its unwind. With the SOX in correction territory — defined as a decline of 10% or more from a recent peak — and two major catalysts, earnings and Iran sanctions, arriving in the same window, heightened volatility across the semiconductor complex is the base case rather than the outlier.