US stocks hovered near the flatline in early trading on Wednesday, as the latest economic data did little to alter market expectations that the Federal Reserve will raise interest rates by the end of the year, while investors anxiously awaited Nvidia's earnings report.
At 9:43 AM New York time, futures on the three major US indices were roughly unchanged. Fresh data showed that real consumer spending stalled, and a key inflation gauge rose in line with expectations, though another report indicated the economy continues to grow at a solid pace.
Money markets have fully priced in a rate hike by the Fed before December, with short-term Treasury yields underperforming. Ellen Zentner of Morgan Stanley Wealth Management noted that the market remains sensitive to any news that could increase the odds of a rate increase, and the latest figures may not be the outcome investors were hoping for. She added that the data is not yet sufficient to tip the scales at the Fed's September meeting, but if subsequent reports continue pointing in the same direction, the central bank could feel mounting pressure to abandon its wait-and-see stance.
"The challenge is becoming clearer: inflation remains uncomfortably high, and investors will be watching whether Fed Chair Kevin Warsh uses Friday's Jackson Hole speech to outline how policymakers plan to bring inflation back down to the Fed's long-term target," said Bret Kenwell of eToro.
Beyond the economic landscape, Wall Street is also eagerly awaiting Nvidia's earnings. The focus is not solely on the chip giant's own financial performance, but also on what these numbers mean for artificial intelligence investors and the broader market. According to compiled data, analysts project Nvidia's revenue will nearly double year-over-year, marking its fastest growth in two years, with net income expected to follow a similar trajectory.
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