NEW YORK, May 15 (Reuters) - Two themes critical to the U.S. stock market -- the artificial intelligence boom and inflation-pressured consumer spending -- will come under the microscope next week with earnings reports from semiconductor giant Nvidia and a host of retailers led by Walmart.
Stock indexes have charged higher in recent weeks, with the benchmark S&P 500 and technology-heavy Nasdaq Composite near record levels. Two factors influencing market action in 'almost parallel tracks' have been developments with AI and the spike in energy prices caused by the war in Iran, said Allen Bond, portfolio manager at Jensen Investment Management.
'There is not a lot of overlap in the two narratives, but one day to the next, the developments ... can really drive the market,' Bond said. Stocks pulled back on Friday, as rising crude prices stoked inflation fears that also drove bond yields sharply higher.
Still, the S&P 500 has climbed nearly 17% since its low for the year in late March, and is now up more than 8% in 2026. After the sharp rise, several investors said the market was poised for a breather. Some worried that relatively few stocks have led the recent gains, suggesting the rally may be less robust than it seems.
'There are really a smaller set of names driving the overall index returns again,' said Patrick Ryan, chief investment strategist at Madison Investments. 'It’s not necessarily a healthy market when you have that many stocks being left behind.'
NVIDIA EARNINGS ON TAP AS SEMIS SURGE
Nvidia reports results on Wednesday, as an exceptionally strong first quarter for U.S. corporate profit growth winds down. Shares of Nvidia, the world’s largest company by market capitalization, and other semiconductor stocks have propelled indexes higher in recent weeks. Nvidia shares are up 36% since the March low, while the Philadelphia SE semiconductor index is up more than 60%.
'What we need to see from Nvidia is evidence that justifies the increase in the stock price and justifies their position and their benefit from this increased spending in data centers,' Bond said. 'The results will be looked at ... as a signal into the health of the rest of the industry.'
One topic is whether rivals are eroding Nvidia’s market share, said Yung-Yu Ma, chief investment strategist at PNC Financial Services Group. 'It’s probably going to be more a story of, is Nvidia able to defend its leadership position as well as it has been able to the past few years?' Ma said.
INVESTORS SEEK RETAILER VIEWS ON SPENDING TRENDS
The coming week also offers an update on the retail industry. Walmart, the world’s largest retailer, posts quarterly results on Thursday. Other retailers reporting next week include Home Depot, Target and TJX Cos.
Investors have been wary that war-related inflation will start to weigh on consumer spending, which accounts for more than two-thirds of the U.S. economy. Data this week showed high monthly readings for both consumer and wholesale prices, with the Producer Price Index for April posting its largest rise since March 2022.
Investors will want to hear from retailers about spending trends and whether they have changed in recent weeks, PNC’s Ma said. 'At some point, these costs are going to catch up with consumers and are going to start to moderate spending. That is probably what is more at stake for the retail earnings is, how resilient is the consumer?'
