The S&P 500 continued its weakness on Monday, declining for the sixth time in seven trading sessions as the market euphoria from last week's Federal Reserve rate cut expectations has faded, with investors refocusing on U.S. corporate earnings prospects. The market is now pinning its hopes on NVIDIA's earnings report, expecting the AI chip giant to deliver sufficiently strong results to restore confidence in the technology sector.

The S&P 500 fell 0.4% on Monday, following a 1.5% surge on Friday that brought it close to record highs. The Nasdaq 100 declined 0.3%. Despite broader market pressure, gains in several major technology stocks helped offset wider market losses, with NVIDIA rising 1% ahead of its earnings release.

The market is currently placing its hopes on NVIDIA to alleviate concerns about AI spending. Adam Crisafulli, founder of Vital Knowledge, stated that tech stocks represent a major variable in current market conditions.

**Tech Stocks Become Key Market Variable**

Following Federal Reserve Chairman Powell's speech in Jackson Hole, Wyoming last Friday, which hinted at potential rate cuts, traders felt optimistic about the week ahead. However, the stock market now faces a crucial test: whether the artificial intelligence boom that has driven market gains over the past few years can continue.

Crisafulli noted, "Tech stocks are a huge variable. Despite Friday's broad market rally following Powell's speech, the recent rotation of funds from tech stocks to cyclical and value stocks remains fresh in memory."

As a key supplier of artificial intelligence chips, NVIDIA's significant weighting in major indices gives it outsized influence on the broader market, making it an important bellwether for overall market direction.

Traders hope NVIDIA can ease market concerns about AI spending and effectively validate that the latest market rally is not merely a technical bubble.

KeyBanc analysts indicate that the market broadly expects NVIDIA's third-quarter revenue of $45.92 billion with earnings per share of $1.01. If Chinese business based on chips like H20 and RTX6000D (B40) were included, it could have brought NVIDIA an additional $2-3 billion in incremental revenue.

KeyBanc emphasized in their report that NVIDIA's GPU supply and production capacity are improving significantly, which is the core driver of its continued strong performance. Additionally, server rack production efficiency is also improving.

The report noted that server ODM manufacturers' GB200 rack manufacturing yield rates have approached 85%, with rack shipments expected to reach 15,000-17,000 units by year-end. Consequently, the firm raised its full-year GB200 rack shipment forecast from 25,000 units to 30,000 units.

Beyond NVIDIA, Dell Technologies and Marvell Technology will also report earnings later this week.