US Stocks Lose Direction as Hot PCE Meets Mixed Nvidia Reaction

Wall Street is struggling for direction after a hotter-than-expected inflation reading and a less enthusiastic reaction to Nvidia’s latest results.

July core PCE rose 3.3% year on year, still well above the Fed’s 2% target. The data pushed rate-hike expectations higher, while the Dollar and Treasury yields moved up.

Nvidia delivered another strong quarter, but the numbers were not strong enough to impress everyone.

The company guided for third-quarter revenue of around $108 billion, above the roughly $104 billion consensus, but below some of the more bullish estimates. Gross margin is also expected to slip to 74% from 75%, raising fresh questions about the cost of the AI investment boom.

That reaction matters for the Nasdaq 100.

Nvidia has become one of the biggest drivers of the AI trade, so another muted response to strong results suggests the market is demanding more than simply beating estimates. Investors want to see whether AI spending can keep accelerating and support increasingly high valuations.

Attention now turns to Fed Chair Kevin Warsh’s Jackson Hole speech on Friday.

A hawkish message could push yields and the Dollar higher, adding pressure to technology stocks. A softer tone could give the Nasdaq some breathing room, particularly if investors decide that Nvidia’s strong underlying demand still outweighs the margin concerns.

For the Nasdaq, the setup is becoming more difficult: inflation is keeping rates higher, while even strong AI earnings are facing a higher bar.