PCE Index, Nvidia Earnings, and Warsh Address Set to Determine US Stock Market Rally

The US stock market has been facing headwinds due to rising long-term Treasury yields, snapping a four-week winning streak. The upcoming week will be crucial in determining whether the rally can regain its footing. Three pivotal events are lined up for consideration: the release of the Personal Consumption Expenditures (PCE) price index, Nvidia's earnings, and Fed Chair Kevin Warsh's keynote address at the Jackson Hole Symposium.

The PCE price index is expected to show a 0.1% month-over-month increase and 3.6% year-over-year rise in July. This would represent a deceleration from June's annual rate of 3.7%. The core PCE price index, which excludes volatile food and energy prices, is projected to have increased 0.2% month-over-month and 3.3% year-over-year.

Nvidia's earnings are expected to serve as a critical variable in reigniting enthusiasm for AI stocks. As the barometer for the entire AI investment cycle, Nvidia has evolved beyond being merely a semiconductor company. Its surge in data center investment using its chips has driven massive capital flows not only into semiconductors but also into power, construction, and financial markets.

Fed Chair Kevin Warsh's keynote address at the Jackson Hole Symposium will provide insight into his policy reaction function. Investors are eager to understand which economic indicators he will respond to, what changes will trigger action, and what monetary policy tools he will deploy. TD Securities expects Warsh is unlikely to significantly alter his existing approach.