After the Pop, a Pause: Stocks Step Back as Wall Street Awaits Nvidia and the PCE Scorecard

Stocks took a small step back to start the week, the natural sequel to a Friday rally that priced in a friendlier Fed without declaring victory. Powell’s message—ready to ease if the numbers allow—left investors leaning toward a September cut, but not blind to the hurdles between here and there. So futures slipped, breadth cooled, and the market shifted from macro cheer to micro proof.
The proof, first and foremost, is Nvidia. The company reports midweek with the bar set high. Beyond headline revenue, investors want to see whether build-outs in data centers are broadening, how supply is pacing to demand, and how management is navigating export limits. In a market where AI has been the oxygen, one company’s guidance can change the air pressure across indices.
The other test is the Fed’s preferred inflation gauge on Friday. A softer core PCE would keep the “insurance cut” narrative intact and nudge real yields lower—a tailwind for long-duration corners of the market from software to communication services. A sticky print, by contrast, would stiffen yields, firm the dollar, and take some shine off the post-Jackson Hole glow.
Fixed income will have its say regardless. A busy Treasury calendar means more duration for the street to absorb, which can weigh on multiples even when the policy path bends dovish. That helps explain why strategists have been careful to separate the “what” (cut odds up) from the “why” (jobs risk vs. inflation comfort). Cuts are most bullish when they acknowledge success on prices, not when they flash concern about growth. This week’s data flow will help the market decide which interpretation fits.
Not that the equity backdrop is sour. Sell-side houses have begun upgrading their year-end views as earnings prove sturdier than feared. One high-profile lift to a 6,600 S&P 500 target underscores how much profit growth—not just falling discount rates—has carried the benchmark this year. Still, the message beneath the upgrades is discipline: leadership can rotate quickly, single-name execution matters, and crowded trades can unwind on guidance misses.
In short, Monday’s softer open is a reset, not a reversal. If Nvidia reassures and PCE cooperates, the Friday rally can stick. If either disappoints, expect a choppier path that favors balance-sheet strength and cash-flow visibility. The Fed has given markets permission to hope; the week’s scoreboard will tell them how much.