Market Pullback After Record Rally.US stock futures slipped Monday as the Dow Jones Industrial Average (^DJI) fell 0.8%, the S&P 500 (^GSPC) dropped 0.4%, and the Nasdaq Composite (^IXIC) trimmed gains to close down 0.2%.
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finance.yahoo.comThe retreat followed a dramatic rally last week, where the Dow surged over 800 points to its first record high of 2025, driven by optimism about potential Federal Reserve rate cuts starting in September.
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finance.yahoo.comTraders are now cautiously reassessing after the sharp pullback, with Nvidia (NVDA) earnings looming as a key catalyst for the week ahead.Nvidia Earnings as Key Test.The tech sector faces heightened scrutiny as Nvidia, the most valuable S&P 500 stock, prepares to report results on Wednesday.Analysts expect the chipmaker to post $1.01 in earnings per share and $46.13 billion in revenue, reflecting strong demand for AI hardware.
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finance.yahoo.comNvidia's shares have already gained 32% year-to-date and nearly doubled since April's market low, making its earnings report a critical litmus test for the broader tech sector and AI-driven growth prospects.
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finance.yahoo.comA disappointing outcome could trigger ripple effects across the Nasdaq, while a strong beat may reinforce investor confidence in AI as a core growth engine.Economic Data and Fed Outlook.Investors are closely watching Friday's July PCE inflation report, the Fed's preferred gauge of inflation.Economists anticipate core PCE to rise 2.9% year-over-year, slightly higher than June's 2.8%, which could influence the central bank's rate-cut timeline.
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finance.yahoo.comMeanwhile, the VIX volatility index has dropped sharply, signaling reduced near-term market swings but not eliminating concerns about potential surprises in economic data or corporate earnings.
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m.economictimes.comRate-cut bets remain intact, with futures markets still pricing in a high probability of a September 25 basis-point cut, though traders caution that hotter-than-expected jobs reports could disrupt this outlook.
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m.economictimes.comTech Sector Divergence.While the broader market retreated, some tech stocks outperformed.Axon Enterprise (AXON) surged 16% after beating earnings estimates and raising its full-year revenue outlook, driven by demand for AI-powered policing tools like its TASER 10 device.
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investopedia.comPalantir Technologies (PLTR) also rose 7.8% following strong second-quarter results, with analysts at major banks revising price targets upward due to robust demand for its AI platform.
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investopedia.comHowever, Gartner (IT) plummeted nearly 28%, citing weaker-than-expected sales guidance and soft demand in its insights segment amid economic uncertainty.
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investopedia.comGlobal Market Implications.The US market's cautious tone contrasts with Asian equities, which rose on hopes of US rate cuts fueling global growth.European markets remained cautious, with bond yields signaling slower inflation progress than expected[@4].This divergence underscores the importance of Nvidia's earnings and the PCE report in determining whether the recent rally marks a sustainable shift or a temporary spike.For now, patience appears to be the prevailing strategy as investors await clarity on both corporate performance and macroeconomic trends.Key Risks and Opportunities.The week ahead will test market resilience, with two major catalysts: Nvidia's earnings and Friday's inflation data.A strong AI-driven report from Nvidia could reinvigorate tech stocks, while a disappointing outcome or hotter-than-expected inflation could trigger a sharp pullback.Meanwhile, the Fed's next move remains pivotal, as policymakers balance inflation control with growth concerns.For investors, the coming days will determine whether the recent rally is a prelude to broader gains or a fleeting rebound in a volatile market.
