US Stocks Slump as Inflation Bites Ahead of Nvidia Earnings

The US stock market is poised for a lower open on Wednesday, as hotter-than-expected inflation data adds to bets of a September interest rate hike. The Personal Consumption Expenditures index rose 3.7% on an annual basis in July, slightly above the expected 3.6%, according to economists polled by Reuters.

Core PCE rose 3.3% in the same period, in line with estimates. Expectations of a rate hike in September moved up slightly to about 40% from nearly 36% before the data, per LSEG data.

Nvidia's quarterly earnings are set to be closely watched, as investors look for signs of slowing growth or a stellar report that will reinforce the AI-driven rally. Anything less than a strong result could rekindle doubts about the sustainability of the AI boom and set the tone for tech stocks for the rest of the week.

Jeff Buchbinder, chief equity strategist at LPL Financial, noted that inflation is 'sticky' and temporarily putting upward pressure on interest rates. He added that as long as fundamentals remain strong, the market will hold up okay.