After a turbulent week marked by mixed retail results, rising bond yields, and a surprise Treasury intervention, investors are bracing for another five trading days packed with high-stakes events. President Trump is set to unveil economic countermeasures against Iran, AI juggernaut Nvidia (NVDA.US) will deliver its quarterly report, closing the curtain on the tech earnings season, and key inflation data is due to offer fresh guidance on the Federal Reserve's next rate move. On top of that, economists and central bank officials will gather for the Jackson Hole global policy symposium. Last Friday, the S&P 500 edged up 0.4% but still ended the week down 1.4%; the Dow gained 1% on Friday yet lost 0.9% for the week, while the Nasdaq rose 0.4% on the day but slid 2% over the five sessions.
This week, a fresh wave of retailers will report earnings across various price points, providing more clues on the resilience of U.S. consumer spending. Dick's Sporting Goods (DKS.US) posts results on Tuesday, with Five Below (FIVE.US), Urban Outfitters (URBN.US), and Bath & Body Works (BBWI.US) following on Wednesday. Ulta Beauty (ULTA.US) reports on Thursday—after several big-box retailers last week highlighted the beauty segment as a key growth driver. Meanwhile, Dollar General (DG.US) and Dollar Tree (DLTR.US) will reveal the extent to which middle- and upper-income shoppers are trading down and hunting for discounts.
Yet the market's biggest focus is squarely on Nvidia's earnings on Wednesday, which will serve as a critical test for the recent rebound in AI-related stocks. On the economic data front, the schedule is just as busy. The Chicago Fed releases its national activity index on Monday, the Conference Board's consumer confidence gauge lands on Tuesday, and the Fed's preferred inflation measure—the PCE price index—takes center stage on Wednesday, offering key inputs for the September policy meeting. Friday wraps up the data-heavy week with the University of Michigan's consumer inflation expectations and sentiment survey.
Nvidia: AI Trade and Its Own Narrative Face a Dual Exam
As the last of the "Magnificent Seven" to report, Nvidia's earnings on Wednesday will be the key window into an AI rally that flagged earlier this year but has recently rekindled. Looking across the current tech earnings season, results have been a mixed bag. Microsoft (MSFT.US) and Amazon (AMZN.US) have somewhat eased concerns that AI investments aren't paying off, but Meta (META.US) and Alphabet (GOOGL.US) have reignited worries about ever-rising capital expenditures. However, much of that spending flows straight to Nvidia—which sits in the golden seat of the AI supply chain.
Nvidia's current challenge stems from its own success: extraordinarily high market expectations, and a valuation that seems to have already priced in every bullish narrative about AI expansion. After a string of blockbuster orders and strong demand signals, any report that falls short of "perfect" could be seen as a disappointment. Still, if Nvidia can position itself as the financial backbone of the entire AI ecosystem, it could unlock the next leg up for its stock. HSBC analyst Frank Lee noted in a Friday report that Nvidia's next phase of upside may come from its new role as the world's largest open-source AI contributor—a shift that would broaden its customer base from a handful of top tech giants to "millions of independent developers and sovereign nations."
Bitcoin Catches a Breather
In a sign that could herald a shift from winter to spring, crypto bulls are starting to dream of a recovery. Bitcoin (BTC-USD) staged a sharp rally last week, shaking off months of listless trading to reclaim the $70,000 level for the first time since late May. Several forces are driving the rebound: Trump has again pushed forward on legislation that addresses the crypto industry's long-standing requests, and a surprise expansion of long-dated Treasury buyback operations by the U.S. Treasury has also lifted digital asset prices. Worries about runaway government debt are further bolstering bitcoin's appeal as a haven—Treasury data released last week showed total U.S. debt has surpassed $40 trillion.
Still, as with previous bouts of optimism, the biggest question remains: can this rally last? Bernstein strategist Gautam Chhugani wrote in a recent note that "bitcoin has historically responded positively to liquidity expansion." While the ultimate impact of the Treasury's expanded buyback program on interest rates is still unclear, the policy signal itself is a tailwind for digital assets.
Fed Caught Between Inflation Pressures and an "Aggressive" Treasury
Balancing its dual mandate is no easy task, and now the Federal Reserve must also contend with unexpected moves from the Treasury. The sudden expansion of the bond buyback program last week will continue to reverberate, creating a subtle tension with the Fed's rate decisions. Fed Governor Kevin Warsh has previously signaled he would welcome higher yields as a way to raise borrowing costs and tighten financial conditions without the Fed having to hike directly. But the buyback operations are aimed precisely at pushing yields down and steering the economy toward expansion.
"The Fed and the Treasury are basically pulling in opposite directions," Wil Stith, senior bond portfolio manager at Wilmington Trust, told Yahoo Finance. "I think that's going to force the Fed—which has the bigger policy toolbox—to make larger adjustments to the federal funds rate target." One comfort for central bankers is that bond markets have so far shown little dramatic reaction to the Treasury's actions. On the other side, inflation is proving stickier. That's what policymakers will be focused on this week as the PCE inflation data approaches. Goldman Sachs Research chief economist Jan Hatzius holds the mainstream view in his latest report, arguing that price pressures have improved over the past few months and that temporary inflation drivers like tariffs and energy may gradually fade. However, if the data comes in unexpectedly hot, it could reignite calls for a September rate hike.
Investors will also be mining the Jackson Hole symposium for more clues on the Fed's policy thinking.
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