Is Wall Street’s relief sustainable—or just a pause before the next test? The market snapped back after Fed Chair Jerome Powell cracked open the door to a rate cut in September, emphasizing shifting risks and “a curious labor market.” The S&P 500 and Dow Jones hit record highs, while small caps surged—investors are now placing 85% odds on a Fed cut next month.
The euphoria, however, faces a major test with Nvidia’s earnings this week (expectations here). After a week where AI stocks showed weakness except during Friday’s rally, Nvidia’s results could decide the next direction for the tech trade. Meanwhile, all eyes are on Friday’s PCE inflation data, the Fed’s preferred inflation gauge, expected to climb to 2.9% annual core inflation.
