Nvidia Earnings and Inflation Data to Test Market's Resilience

The market is bracing for a busy week of earnings reports and economic data releases. On Wednesday, AI giant Nvidia will report its quarterly results, marking the end of tech companies' earnings season. The company's performance will be closely watched as it has been a key beneficiary of the AI boom. However, with high expectations and a valuation that already reflects optimistic scenarios for AI expansion, anything less than a 'perfect' report could be seen as disappointing.

Nvidia's success is also its challenge: sky-high market expectations and a valuation that seems to have priced in every positive narrative about AI growth. According to HSBC analyst Frank Lee, the company's next phase of growth may hinge on its emerging role as the world's largest open-source AI contributor, expanding its customer base from top tech giants to 'millions of independent developers and sovereign nations.'

Meanwhile, investors will also focus on key inflation data releases this week. The PCE Price Index, which is closely watched by the Federal Reserve, will be released on Wednesday. If stronger-than-expected data rekindles calls for a Fed rate hike in September, it could have significant implications for interest rates and the broader market.

Bitcoin has recently seen a surge, breaking out of months-long doldrums to reclaim the $70,000 level, a first since late May. Multiple factors contributed to this rebound, including Trump's push forward on legislation supporting the crypto industry and the US Treasury's decision to ramp up long-term bond purchase operations.

However, as with previous positive catalysts, the major question remains: can this rally be sustained? Historically, bitcoin has responded positively to liquidity expansion. The Fed faces dual pressures: inflation and an 'aggressive' Treasury, which is pushing in opposite directions. This could force the Fed to make bigger adjustments in the federal funds rate target.