Inside Markets — Key Datapoint

NVDA earnings on Wednesday afternoon remains the key datapoint as we close out August. AI themes came under pressure last week as rate-induced rotational dynamics favored cyclical/value stocks, while the source of NVDA-specific anxiety mostly centers on a brief history of stagnant price action during the second half of the year. The H2 effect may be due to lack of incremental catalysts given that hyperscalers typically use the January earnings season to announce year-ahead capex plans. An outright NVDA earnings miss could drive a material sell-off in tech and ~5% pullback in the SPX, but the lack of year-ahead guidance is a subtle development that sets in over time.

There may also be some interest in Friday’s release of July core PCE inflation, but we see the report as largely de-risked given the hot July PPI/import price data. A hotter-than-expected core PCE print would merely confirm the prior data, while a cooler report could reinstate last week’s rotation into cyclical/value stocks.

Upon returning from Labor Day, market attention will turn to the August Jobs report due Friday (9/5). A September rate cut is currently priced into markets and unwinding that expectation would be the obvious event to deliver on the widely reported seasonal weakness. However, it would likely take a big increase in non-farm payrolls (+175,000 or more) to shift expectations away from a September rate cut. Recall July non-farm payrolls increased just +73,000 and consensus is currently looking for +85,000. The following week brings August CPI on Thursday 9/11 where it seems unlikely that a hot print could derail expectations for a September cut to address a lack of healthy job creation.

The primary trend is higher in a bull market and the SPX keeps its bullish trend intact above ~6250. In our view, a break below ~6250 would only be a warning sign into more critical pattern support at 6147.