Stocks surge into weekend as Powell hints at September rate cut; Nvidia earnings in focus
Markets closed the week on a high note after Federal Reserve Chair Jerome Powell signaled that a rate cut could be on the table as soon as September. His remarks at Jackson Hole helped turn a shaky week into a strong finish, sending the Dow Jones Industrial Average (^DJI) to fresh record territory.
The S&P 500 (^GSPC) eked out a 0.3% weekly gain, while the Nasdaq Composite (^IXIC) slipped 0.5%. The Dow outperformed with a 1.5% advance, fueled by a late-week surge sparked by Powell’s shift in tone.
Looking ahead, Wall Street’s attention turns to Nvidia’s (NVDA) quarterly earnings report on Wednesday. As the world’s most valuable company and the face of the AI boom, Nvidia’s results will be a critical test of whether the summer rally has staying power.
Other notable reports this week include Dell (DELL), Dick’s Sporting Goods (DKS), Best Buy (BBY), Dollar General (DG), and Abercrombie & Fitch (ANF).
Powell “opens the door wider”
Delivering what may be his final Jackson Hole address as Fed chair, Powell acknowledged that risks to the labor market are rising and that tariff-driven inflation pressures could prove temporary. He noted the Fed’s policy stance “may warrant adjustment,” language investors interpreted as a clear hint toward easing next month.
JPMorgan economist Michael Feroli summed it up bluntly: “The door to a September cut opened wider.” Markets agreed—FedWatch data on Friday showed traders pricing in an 85% chance of a quarter-point rate reduction in September.
The next big test for rate-cut bets comes Friday, with the release of the Fed’s preferred inflation gauge—the Personal Consumption Expenditures (PCE) index. Economists expect core PCE to rise 2.9% year-over-year in July, up from 2.8% in June, which would mark the fastest annual pace since February.
Wells Fargo economists warned in a recent note that tariff effects are beginning to spread from goods into services, predicting core PCE could top 3% by year’s end. That backdrop leaves the Fed facing difficult choices as growth slows while inflation remains sticky.
Nvidia earnings on deck
Nvidia’s earnings report is the marquee event of the week. Analysts expect second-quarter earnings per share of $1.01 on revenue of $46.13 billion. While Wall Street has been steadily raising price targets, some caution that the company’s near-term outlook could be less explosive than past quarters.
KeyBanc’s John Vinh expects Nvidia to guide slightly below consensus for the third quarter, citing uncertainty around China-related revenue. Still, he raised his price target to $215, noting that momentum into 2025 remains strong.
The stock has surged 32% so far this year and nearly doubled since April’s market lows.
Market rotation underway
Nvidia’s results will land at a delicate moment for the broader AI trade. Tech has cooled off in August, with the Information Technology sector (XLK) ranking as the worst performer in the S&P 500. But Friday’s rally suggests sentiment could snap back quickly unless Nvidia delivers a major disappointment.
Meanwhile, other areas of the market have stepped into leadership. Small-cap stocks and housing shares—both sensitive to interest rates—have rallied sharply as investors bet on a Fed pivot. Over the past month, the Russell 2000 (^RUT) is up 5% and the SPDR S&P Homebuilders ETF (XHB) has soared 10%, compared with a 2.6% gain in the S&P 500.
Interactive Brokers strategist Steve Sosnick framed it this way: “We’ve shifted from a market about outright risk aversion to one about rotation.”
Key events this week
Monday
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Chicago Fed activity index (July)
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New home sales (July)
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Dallas Fed manufacturing activity (August)
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No major earnings reports
Tuesday
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FHFA house price index (June)
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Case-Shiller 20-City index (June)
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Consumer Confidence (August)
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Richmond Fed manufacturing index (August)
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Earnings: BMO, MongoDB (MDB), Okta (OKTA), PVH (PVH)
Wednesday
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MBA mortgage applications (Aug. 22 week)
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Earnings: Nvidia (NVDA), Abercrombie & Fitch (ANF), CrowdStrike (CRWD), Five Below (FIVE), HP (HPQ), Kohl’s (KSS), Pure Storage (PSTG), Snowflake (SNOW), J.M. Smucker (SJM), Urban Outfitters (URBN), Williams-Sonoma (WSM)
Thursday
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Q2 GDP (second estimate)
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Jobless claims (Aug. 23 week)
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Pending home sales (July)
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Earnings: Affirm (AFRM), Best Buy (BBY), Dick’s Sporting Goods (DKS), Dell (DELL), Dollar General (DG), Gap (GPS), Marvell (MRVL), Petco (WOOF), TD Bank (TD), Ulta Beauty (ULTA), Bath & Body Works (BBWI)
Friday
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PCE inflation report (July)
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University of Michigan consumer sentiment (August, final)
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Wholesale inventories (July)
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Chicago PMI (August)