Nvidia earnings and Jackson Hole: What to watch this week

Nvidia (NVDA) will report earnings on Wednesday, testing the resurgent AI trade after a week in which the S&P 500 fell 1.4%, the Dow lost 0.9%, and the Nasdaq shed 2%. The company faces high expectations, with HSBC analyst Frank Lee suggesting Nvidia could position itself as the world's biggest contributor to open-source AI to expand its customer base. Bitcoin (BTC-USD) reclaimed $70,000 for the first time since late May, aided by renewed legislative efforts and a Treasury Department move to increase purchases of longer-term debt.

After a dizzying week centered on mixed retail earnings, rising bond yields, and a surprise intervention from the Treasury Department, investors step into another action-packed five-day stretch. The president plans to unveil an economic battle plan against Iran, AI kingpin Nvidia NVDA will report earnings to punctuate Big Tech's quarter, and all-important inflation data will arrive to steer the Fed on its next rate-setting journey. Economists and central bankers will huddle at the Jackson Hole Symposium, too. The S&P 500 ^GSPC closed out Friday up 0.4% for a loss of 1.4% on the week. The Dow ^DJI rose 1% to close the week on a loss of 0.9%. And the Nasdaq ^IXIC increased 0.4% but shed 2% on the week. Retailers across the budget spectrum will continue the stretch of earnings offering insight into the American consumer. DICK'S Sporting Goods DKS will report on Tuesday, followed by Five Below FIVE , Urban Outfitters URBN , and Bath & Body Works BBWI on Wednesday. Ulta Beauty ULTA will share results on Thursday after major retailers last week spotlighted beauty as a growth center. And Dollar General DG and Dollar Tree DLTR will shed light on how strongly middle- and higher-income Americans are trading down and hunting for bargains. But perhaps the most attention will land on Nvidia, reporting on Wednesday, in a test of the comeback AI trade. The economic data front is just as busy. The Chicago Fed will kick the week off delivering the national activity index. Tuesday will feature the Conference Board's consumer confidence surveys. And then all eyes will turn to the Fed's preferred inflation gauge, the PCE price index, on Wednesday, helping to define which way the central bank will go at its next policy meeting in September. The University of Michigan's consumer surveys on inflation expectations and the broader economy will round out the week. Nvidia tests the AI trade and its own narrative The last of the "Magnificent Seven" is set to report on Wednesday in what amounts to a test of the once flagging but now resurgent AI trade. Looking around at this quarter's earnings for the other tech giants revealed mixed results. While Microsoft MSFT and Amazon AMZN helped calm some fears about the prospect of AI investments failing to pan out, Meta META and Google GOOG, GOOGL re-sparked lingering worries about increased spending. But much of that spending flows to Nvidia, which sits at a unique and enviable position atop the AI trade. Nvidia's challenge as a stock stems from its own success, of exceedingly high expectations and a valuation that seems to have already maxed out bullish narratives of AI expansion. Coming off blockbuster deals and testimonies of insatiable demand, anything short of a perfect quarter might look like failure. But Nvidia's latest turn as a financial pillar for an entire AI ecosystem could propel the stock's next leg. As HSBC analyst Frank Lee wrote in a note Friday, a possibility for Nvidia's next move upward is to position the company as the world's biggest contributor to open-source AI. That would expand its customer base from a small group of the biggest and most well-resourced companies in tech to "millions of individual developers and sovereign nations." Bitcoin catches a break At the onset of what could be a winter thaw, Crypto bulls are starting to dream of spring. Bitcoin BTC-USD gained significant ground last week, shaking off months of floundering action and reclaiming a price above $70,000 — the first time that's happened since late May. A confluence of factors is fueling the comeback. President Trump has renewed efforts to get new legislation passed that crypto industry players have been clamoring for. And the Treasury Department's surprise move to increase its purchases of longer-term government debt also sent crypto prices higher. Fears over staggering government debt crystallized in bitcoin's favor as the Treasury also released data last week showing that the US national debt had passed $40 trillion. But like other bursts of positive catalysts for crypto, the larger question is, can the momentum last? "Bitcoin historically has had a positive reaction to liquidity expansion," said Bernstein strategist Gautam Chhugani in a new note. It's unclear what impact the Treasury's expanded buyback program will ultimately have on rates, but the signal of it all was bullish to digital assets. The Fed confronts inflation and an activist Treasury Balancing the dual mandate is hard enough. The US central bank also has to contend with the surprise intervention of the Treasury. A sudden expansion of the bond buyback program was a huge move last week, and it will continue to reverberate as the Fed deliberates on what's next for interest rates. The intervention introduced a new tension between the Fed and Treasury. Fed Chairman Kevin Warsh has suggested that he welcomes higher yields as a way to raise borrowing costs and tighten policy without having the Fed raise rates. But the goal of the buybacks was to lower yields and move the economy in an expansionary direction. "We have the Fed and the Treasury basically working in sort of opposite directions," Wilmington Trust senior bond portfolio manager Wil Stith told Yahoo Finance. "I think that's just going to require the Fed, which has the larger sandbox, to sort of adjust the target fed funds rate more so than it would have." A consolation for central bankers is that the bond market essentially shrugged off the Treasury's maneuver. Inflation, on the other hand, is proving more durable. That's where policymakers' attention is turning this week, with the next PCE price index on deck. Jan Hatzius, Goldman Sachs Research's chief economist, holds a prevailing view that pricing pressures have improved over the past several months and that other temporary inflation drivers like tariffs and energy are likely to subside, according to a recent note. But a hotter-than-expected reading could rekindle calls for a September hike. Investors will also get more insight into the Fed's thinking at the Jackson Hole Symposium. Economic and earnings calendar Monday Economic data: Chicago Fed national activity index, July -0.02 previously Economic data: ADP weekly employment change, week ended Aug. 8; Philadelphia Fed non-manufacturing activity, August 7.4 previously ; FHFA house price index, month-on-month, June +0.3% previously ; Richmond Fed manufacturing index, August 5 previously ; Richmond Fed business conditions, August -5 previously ; New home sales, month-on-month, July +1.6% previously ; Conference Board consumer confidence, August 90.8 previously ; Conference Board present situation, August 114.9 previously ; Conference Board expectations, August 74.7 previously Earnings calendar: Bank of Montreal BMO.TO , Intuit INTU , Zoom Communications ZM , DICK's Sporting Goods DKS Wednesday Economic data: PCE price index, month-on-month, July -0.1% previously ; PCE price index, year-on-year, July +3.7% previously ; Core PCE price index, month-on-month, July +0.1% previously ; Core PCE price index, year-on-year, July +3.3% previously ; Personal income, July +0.2% previously ; Personal spending, July +0.3% previously ; Real personal spending, July +0.4% previously ; Durable goods orders, July preliminary reading +0.5% previously ; GDP annualized, quarter-on-quarter, second quarter +1.5% previously ; Personal consumption, second quarter +3.2% previously ; GDP price index, second quarter +6.2% previously ; Core PCE price index, quarter-on-quarter, second quarter +3.4% previously Earnings calendar: Nvidia NVDA , CrowdStrike CRWD , Synopsys SNPS , Agilent Technologies A , Veeva Systems VEEV , Williams-Sonoma WSM , Okta OKTA , Nutanix NTNX , Five Below FIVE , Urban Outfitters URBN , Abercrombie & Fitch ANF , Bath & Body Works BBWI Thursday Economic data: Advance goods trade balance, July -$101.4 billion previously ; Retail inventories, month-on-month, July 0% previously ; Wholesale inventories, month-on-month, July preliminary reading +0.2% previously ; Initial jobless claims, week ended Aug. 22 206,000 previously ; Continuing claims, week ended Aug. 15 1.799 million previously ; Kansas City Fed manufacturing activity, August 9 previously Earnings calendar: Royal Bank of Canada RY.TO , TD Bank TD.TO , Marvell Technology MRVL , Autodesk ADSK , Workday WDAY , Prudential PRU , Dollar General DG , Dollar Tree DLTR , Burlington Stores BURL , Ulta Beauty ULTA , Rubrik RBRK Friday Economic data: MNI Chicago PMI, August 57.6 previously ; U. Mich. sentiment, August final reading 51 previously ; U. Mich. current conditions, August final reading 51.8 previously ; U. Mich. expectations, August final reading 50.6 previously ; U. Mich. 1-year inflation, August final reading 4.3% previously ; U. Mich. 5-10 year inflation, August final reading 3.3% previously ; Kansas City Fed services activity, August 14 previously