In 30 seconds: Nvidia reported record Q2 revenues of $96 billion, up 106% year-over-year, marking its 16th straight earnings beat and driving outsized gains in tech stocks while the broader market lagged. A wave of US economic data showed resilient jobless claims, cooling core inflation, surging corporate profits, and a sharply widened goods trade deficit driven by capital goods imports tied to AI infrastructure investment. Analysts debated the structural vulnerabilities of the post-1971 dollar reserve system, with Luke Gromen arguing for a return to gold, while Brad Setser highlighted how tariff exemptions on chips and AI hardware are fueling a record trade deficit and noted declining BYD domestic EV sales. Bank of Japan Deputy Governor Himino signaled openness to a rate hike next month while the ECB discussed whether mildly restrictive policy may be needed to return inflation to its 2% target, with markets watching Fed Governor Warsh's upcoming Jackson Hole speech for direction.
16th straight revenue beat for Nvidia. Wall Street has underestimated its growth every single quarter for 4 years now. This quarter was no exception: Nvidia Q2 revenues came in at $96 billion, up 106% year over year, while net income hit $59.7 billion, climbing 126% year over year. Year-to-date net profit margins sit at 66%, an all-time record. The company guided Q3 2026 revenue to $108 billion, implying 89% growth. You do not normally see deceleration described as "only" 89 percent, but here we are. The post-earnings pop of roughly 7% fits neatly with the stock's 7.4% average move over its last 12 reports, though the more recent last 8 quarters have averaged just 2.75%. NVDA post-earnings move (last 12 reports) 7.4% vs NVDA post-earnings move (last 8 quarters) 2.75%. Nvidia beat revenue estimates for the 16th consecutive quarter. Among peers in Q2, Nvidia led at 106% revenue growth year over year, followed by AMD at 50%, Broadcom at 48%, Meta at 28%, Google at 24%, Amazon at 20%, Microsoft at 18%, and Apple at 16%. The S&P 500 aggregate managed 15%. Micron $MU Q2 revenue posted 346%, which is the kind of number that makes you check the decimal. The broader market, however, did not share the enthusiasm. 10 of 11 sectors are in the red while Tech is the one sector in the green. NVIDIA $NVDA was adding about 50 index points to the S&P 500. Basically all of its gains. Among stocks reporting after the close, 11 of 11 beat sales estimates, 10 of 11 beat on earnings, five raised guidance, and the average pre-market move was 4%.
The labor market keeps refusing to crack. Initial jobless claims for the week ending 2026-08-22 came in at 203,000, down 4,000 from the prior week's 207,000 and comfortably below the 208,000 consensus estimate. Continuing claims fell to 1,778,000, off 18,000 on the week. The inflation picture is cooperating too, at least on the surface. One economist noted that even a hot August inflation print won't move the three-month average much, because the hot May print drops out of the calculation. Inflation continues to broaden out; 55% of all 178 components to core PCE were >0% YoY vs 47% a year ago. One economist argued that standard macroeconomics is winning out over the Trump tariffs. A big budget deficit plus a surge in investment in an import heavy sector would normally result in a big trade deficit. The punchline: the key inputs for the AI/data center buildup have essentially been excluded from the tariffs. There aren't tariffs on imported chips or imported computers. The tariff wall has a chip-shaped hole in it. Corporate profits surged 22.8% year-over-year in 2Q26, the strongest growth since 4Q21 when they ran at 27.9%. Consumer spending tilted toward services, which rose $86.2B, while goods spending fell $49.9B. Personal savings rate: 3.0%. The Kansas City Fed Manufacturing Index rose to 10 in August, with new orders jumping to 16, though prices paid climbed to 55. The data, broadly, was better than expected.
The themes driving the US economic data are also a factor in USD reserve status, gold, and tariff impacts.
Gold closed at $4,658.30 on 2026-08-27, up 1.307% on the day. If you wanted a single price to summarize the argument that the dollar's structural foundations are cracking, that one will do for now. The thesis, stated plainly: the post-1971 structure of USD reserve status has reached its logical terminus. The reasoning runs through supply chains. The US military, often cited as the ultimate backstop of dollar hegemony, cannot be re-supplied without Chinese factories. This is not a comfortable observation for people who like their reserve currencies backed by aircraft carriers. The proposed fix, in one analyst's framing: a return to a neutral reserve asset — gold — that floats in USD and all FX. On that tariff front, the picture is messy in instructive ways. The fentanyl tariff on China last year lacked the relevant exclusion, so people left China in droves. Meanwhile, the conventional wisdom holds that BYD makes its money by exporting. The domestic side tells a different story: domestic BEV sales have stopped increasing. BYD domestic sales fell 15% year over year in the first half of the year, with monthly volumes dropping from 800,000 last fall to 650,000 by July. If your domestic market is plateauing, the export story stops being a growth narrative and starts being a survival strategy.
The nice thing about central banking is that you can say almost nothing and still move markets. Bank of Japan Deputy Governor Ryozo Himino kept the door open to an interest rate increase next month, offering no clear pushback against growing market expectations for a move. In central bank communication, silence is its own signal. If you wanted to talk the market out of pricing a hike, you would talk the market out of pricing a hike. ECB officials discussed whether 'mildly restrictive' monetary policy could be needed to ensure inflation returns to the 2% target. The interesting word here is "mildly," which does a lot of work.
Here is what it costs to borrow money right now.
30-year fixed mortgage: 6.66%, up 1 bp on the week
15-year fixed mortgage: 5.98%, up 0.50% on the week
Auto loan rate (60-month): 7.14%, down 5.18% on the quarter
Credit card rate: 20.94%, down 0.29% on the quarter
Prime rate: 6.75%, flat on the day