The S&P 500 traded near the flatline on Wednesday after July's personal consumption expenditures report showed inflation running hotter than expected. Attention has now shifted to Nvidia, which reports quarterly results after the close in what markets see as the real test for the AI-driven rally.
The S&P 500 was relatively unchanged Wednesday after the July personal consumption expenditures report. By mid-morning the S&P 500 was down 0.1% and the Dow Jones Industrial Average was flat, Barron's reported.
Core inflation holds at 3.3% annually
July's headline PCE index rose 0.2% on the month and 3.7% year over year, both a tenth of a point above what economists polled by Dow Jones had expected. Core PCE, which strips out food and energy, matched forecasts with a 0.2% monthly gain and a 3.3% annual increase.
Odds of a September rate hike moved up slightly to about 40% from nearly 36% before the data, according to LSEG pricing cited by Reuters. Separately, second-quarter GDP grew 1.5%, in line with estimates.
According to Reuters, Jeff Buchbinder, chief equity strategist at LPL Financial, said: "This market is a tug of war between earnings and interest rates".
Nvidia earnings will test the AI rally
Nvidia is due to report second-quarter results Wednesday after the bell. Wall Street projects earnings per share of $2.09 on $92.28 billion in revenue, according to FactSet. The report carries extra weight because the chipmaker is the largest S&P 500 member, with a market cap of more than $5 trillion.
Investors are also watching for anything less than a stellar report, which could rekindle doubts about the sustainability of the AI boom and set the tone for tech stocks through the rest of the week. Federal Reserve Chairman Kevin Warsh is also due to speak Friday at the Jackson Hole symposium, with markets watching for any signal ahead of September's policy meeting.
Sources: CNBC, Investing.com, Barron's (snippet-based)
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