Markets rallied sharply at the end of last week following comments from Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Symposium. Powell’s remarks suggested the Fed may be preparing to cut interest rates in September, which sent equities higher. The S&P 500 gained about 1.5% on Friday, and the Dow reached a new all-time high.
Despite this optimism, it’s important to note that several key data points—such as another jobs report and an additional inflation report—will be released before the Fed’s next meeting in mid-September. These could influence whether the anticipated rate cut materializes. At current levels, markets remain vulnerable to disappointment or surprises.
Looking ahead, one of the most closely watched events this week will be Nvidia’s earnings report, scheduled for release Wednesday after the market close. Nvidia has become the bellwether of the artificial intelligence trade, with about 40% of its revenue tied to major tech companies including Meta, Microsoft, Alphabet, and Amazon. The company is now valued at $4.4 trillion, representing roughly 8% of the entire S&P 500. With such a large weight in the index, Nvidia’s performance has significant influence on overall market direction.
While Nvidia and Meta have each posted gains of about 30% this year, they are the only two of the widely discussed “Magnificent Seven” stocks to rank in the S&P 500’s top 100 performers year-to-date. This underscores the breadth of strength across the broader market, as many other companies are also delivering strong results.
Diversification remains a key principle in today’s environment. The AI trade continues to generate enthusiasm, but balancing conviction with risk management is essential. Markets will be watching Nvidia’s results closely this week, alongside ongoing economic data, to gauge the next phase of momentum.