S&P 500 and Nasdaq end lower as tech stocks decline ahead of Nvidia earnings

Wall Street’s two most-watched indexes closed in the red on Monday as technology stocks dragged down the broader market. The S&P 500 fell 21.37 points, or 0.28%, to settle at 7,653.00, while the Nasdaq Composite took a harder hit, dropping 200.80 points, or 0.77%, to close at 25,979.66.

The culprit was a familiar one: semiconductors. The Philadelphia Semiconductor Index, which tracks the industry’s heavyweights, slid 2.64% on the day.

Chip stocks take the brunt

Nvidia, the company whose earnings report has become something of a quarterly market holiday, fell 2.03% ahead of its scheduled August 26 results. Micron Technology dropped 5.76%, the sharpest decline among major semiconductor names. Broadcom shed 1.74%.

Nvidia’s second-quarter fiscal 2027 earnings are expected to show revenue of roughly $92 billion and earnings per share of $2.09.

Geopolitics add fuel to the fire

The Trump administration announced a sweeping new sanctions package against Iran on Monday, branded “Operation Economic Outcast.” The initiative targets five key sectors and 60 specific entities, though the administration stopped short of imposing immediate penalties on major trading partners. Instead, it established a compliance window, giving affected parties time to adjust their operations.

Technology and digital assets were among the five sectors named in the sanctions framework.

Adding another layer of complexity, Texas Governor Greg Abbott publicly criticized the rapid expansion of AI data centers, raising questions about whether political resistance to the physical infrastructure behind AI could become a headwind for the sector.

What comes next

Wednesday’s Nvidia earnings report now carries even more weight than it did a week ago. The combination of Monday’s selloff, new sanctions uncertainty, and political scrutiny of AI infrastructure means the report will be interpreted through multiple lenses simultaneously.

If Nvidia delivers the $92 billion revenue figure analysts expect, and if management provides upbeat guidance on data center spending, it could reverse much of Monday’s damage across the semiconductor sector. Micron’s 5.76% drop on Monday suggests some investors are already positioning for a downside scenario.

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