US Inflation Surges 3.7%, Wall Street Reacts with Caution Ahead of Nvidia Earnings

Wall Street's main indexes declined on Wednesday after a hotter-than-expected US inflation reading. The Commerce Department reported annual inflation increased 3.7% in the 12 months through July, slightly above expectations.

The latest print added another wrinkle to the Federal Reserve's policy outlook, raising stakes for upcoming economic data. Investors will focus sharply on Fed Chair Kevin Warsh's Jackson Hole speech on Friday.

Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, said 'it wasn't enough to shift the balance for September's meeting, but if subsequent data point in the same direction, the Fed may feel more pressure to move off the sidelines.'

Nvidia's quarterly update is also on investors' radar. The chip giant could rekindle doubts about the sustainability of the AI boom with anything less than a stellar report.