U.S. stocks rose modestly on Tuesday, August 26, as investors balanced fresh signs of economic weakness against a stream of bullish long-term equity views and anticipation over Nvidia’s closely watched earnings.

The Dow Jones Industrial Average added 135.91 points, or 0.30%, to 45,418.4, while the S&P 500 climbed 26.58 points, or 0.41%, to 6,465.90. The Nasdaq Composite advanced 94.98 points, or 0.44%, to 21,544.3. The small-cap Russell 2000 outperformed, up 0.82% at 234.27.

Nvidia in the Spotlight

Markets also braced for Wednesday's earnings from Nvidia, widely seen as the bellwether of the AI trade. Angelo Zino of CFRA projected north of 50% growth for both the July and October quarters, with Q3 guidance likely to set the tone.

Investors are watching whether gross margins hold at 72–73% and how management addresses regulatory uncertainty in China, where potential market access could reach $50 billion if U.S. export approvals are granted. Zino underscored Nvidia’s dominance: “They don’t have the ecosystem that Nvidia has,” he said of Huawei, downplaying competitive threats.

Durable Goods Orders Slide Again

Economic sentiment was tested by another contraction in manufacturing. The U.S. Census Bureau reported that new orders for manufactured durable goods fell 2.8% in July, or $8.8 billion, to $302.8 billion — the third decline in the past four months. This followed June’s steep 9.4% drop. Excluding transportation, orders rose 1.1%, but defense-adjusted bookings fell 2.5%. Transportation equipment drove the weakness, plunging 9.7% to $101.7 billion.

The back-to-back declines highlight fragility in industrial demand, a worrying sign as investors look for broader confirmation of economic resilience.

Citi: Structural Bull Case for Equities

Offsetting near-term jitters, Citi Research reiterated a long-term bullish outlook. In a podcast released Tuesday, Scott Chronert, Citi’s Head of U.S. Equity Strategy, argued that the S&P 500 is positioned for structural bull market

Chronert highlighted how the index has shifted toward growth companies, with their share rising from 12% in the 1990s to nearly 40% today. He cited AI-driven productivity, surging free cash flows, and stronger earnings durability as factors supporting sustained higher valuations. “Large-cap U.S. equities are increasingly taking on a growth profile,” Chronert said, noting that the trend should bolster investor confidence beyond cyclical swings.

Household Debt Adds to Concerns

Consumer balance sheets also remain under pressure. According to the New York Fed’s Household Debt and Credit Report, total household debt rose 1.0% in the second quarter to $18.39 trillion, an increase of $185 billion. Mortgage balances, the largest share of household liabilities, climbed $131 billion to $12.94 trillion.

The Bank of America Institute noted that debt service ratios remain below historical norms, but signs of strain are growing. Student loan delinquencies spiked following the end of the repayment pause, particularly among borrowers aged 50 and older, while mortgage delinquencies rose fastest in Western states.

Markets closed with modest gains, reflecting investor optimism in equities’ long-term trajectory despite fresh evidence of economic headwinds. Durable goods weakness and rising household debt point to pressure beneath the surface, but enthusiasm around AI, Nvidia, and Citi’s structural bull thesis kept major indexes in the green.