NVIDIA Earnings Collide with Jackson Hole! The Market Faces Multiple Tests This Week: AI Faith, Inflation Dilemma, and Fiscal "Surprise" in Resonance

According to Zhihui Finance APP, after a turbulent week marked by divergent retail earnings, rising bond yields, and unexpected intervention from the Treasury Department, investors are facing another jam-packed five trading days of major events this week. Trump plans to announce economic countermeasures against Iran; AI giant Nvidia (NVDA.US) is set to report earnings, marking the end of tech giants' quarterly results; and key inflation data will be released, providing guidance for the Federal Reserve's next interest rate decision. In addition, economists and central bank officials will gather at the annual Jackson Hole Global Central Banking Symposium.

Last Friday, the S&P 500 Index rose 0.4%, but was down 1.4% for the week; the Dow gained 1% on Friday, down 0.9% for the week; the Nasdaq increased 0.4% on Friday, falling 2% for the week overall.

This week, retailers across various price points will continue to report earnings, offering further clues about the resilience of US consumer spending. Dick's Sporting Goods (DKS.US) reports Tuesday, with Five Below (FIVE.US), Urban Outfitters (URBN.US), and Bath & Body Works (BBWI.US) following on Wednesday. Ulta Beauty (ULTA.US) announces its results Thursday—last week, several major retailers already highlighted the beauty sector as a growth driver. Meanwhile, Dollar General (DG.US) and Dollar Tree (DLTR.US) will reveal the extent to which middle and higher-income consumers are "trading down" and chasing discounts. However, the biggest market focus will be Nvidia's earnings on Wednesday, which will serve as a critical test of the AI rally’s strength.

The economic data release schedule is equally busy. The Chicago Fed's National Activity Index comes out Monday; the Conference Board’s Consumer Confidence Index is released Tuesday; while on Wednesday, the Fed's preferred inflation measure—the PCE Price Index—will be closely watched, providing vital reference for the September FOMC path. On Friday, the University of Michigan’s consumer inflation expectations and economic sentiment survey will wrap up the marathon week of data.

Nvidia: AI Trades and Its Own Narrative Face a Double Test

As the last of the “Magnificent Seven” tech giants to report earnings, Nvidia’s results on Wednesday will be a key gauge of the once-muted but recently revived AI boom.

The tech giants' latest quarter saw mixed results. Microsoft (MSFT.US) and Amazon (AMZN.US) somewhat alleviated market concerns about the difficulty of turning AI investment into returns, but Meta (META.US) and Google (GOOGL.US) reignited worries about persistently rising capital expenditures. Nevertheless, much of that huge outlay is being funneled to Nvidia—which holds the prime spot in the AI industry chain.

Nvidia's current challenges stem from its own success: sky-high market expectations, and a valuation that seems to have already priced in every optimistic narrative about AI expansion. After a series of blockbuster deals and robust demand, anything short of a "perfect" earnings report could be perceived as a disappointment. However, if Nvidia succeeds in positioning itself as the financial pillar of the entire AI ecosystem, the stage could be set for the stock’s next upward move.

According to a research note released Friday by HSBC analyst Frank Lee, Nvidia’s next phase of growth may hinge on its emerging role as the world’s largest open-source AI contributor—which would expand its customer base from a handful of leading tech giants to “millions of independent developers and sovereign nations.”

Bitcoin Gets a Breather

In a potential sign that “spring is finally coming after the crypto winter,” crypto bulls have begun to anticipate a rebound.

Bitcoin (BTC-USD) surged last week, breaking out of months-long doldrums to reclaim the $70,000 level—a first since late May. Multiple factors contributed to the rebound: Trump once again pushed forward on legislation, responding to the crypto industry’s long-standing demands; and the US Treasury’s surprising decision to ramp up long-term bond purchase operations also supported the upward move in crypto asset prices. Mounting concerns over runaway government debt further bolstered bitcoin’s safe-haven appeal—Treasury data released last week showed total US government debt had surpassed $40 trillion.

However, as with previous bursts of positive catalysts, the major question remains: can this rally be sustained? According to Bernstein strategist Gautam Chhugani’s latest report, “Historically, bitcoin has responded positively to liquidity expansion.” While the ultimate impact of the Treasury’s expanded repo plan on interest rates remains uncertain, the policy signal itself is already a boon for digital assets.

The Fed Faces Dual Pressures: Inflation and an "Aggressive" Treasury

Balancing its dual mandate is never easy, and now the Fed must also reckon with surprise moves from the Treasury. The expansion of the bond repo program last week will have ongoing implications, subtly affecting the Fed’s rate decisions. Fed Chair Kevin Warsh previously hinted that he welcomed higher yields, as a means of raising borrowing costs and tightening financial conditions without a direct Fed rate hike. However, the aim of the repo operations is precisely to suppress yields and steer the economy toward expansion.

“The Fed and the Treasury are basically pushing in opposite directions,” Wil Stith, Senior Fixed Income Portfolio Manager at Wilmington Trust, told Yahoo Finance. “I think this will force the Fed—which has the larger ‘policy toolbox’—to make bigger adjustments in the federal funds rate target.” The one small comfort for central bankers: the bond market has largely not reacted violently to the Treasury’s interventions.

Meanwhile, inflation remains persistently sticky—a key focus for policymakers this week as PCE inflation data is set for release. Jan Hatzius, Chief Economist at Goldman Sachs Research, expressed a mainstream view in his latest note, pointing to signs of improving price pressures in recent months, and suggesting temporary inflation drivers like tariffs and energy may gradually fade. However, stronger-than-expected data could rekindle calls for a Fed rate hike in September. Investors will also glean further insights into the Fed’s policy thinking at the Jackson Hole Symposium.