Stock market today: Dow, S&P 500, Nasdaq futures slip after record-setting surge with Nvidia earnings in focus

US stock futures edged lower Monday following last week's robust rally, which saw the Dow Jones Industrial Average hit a new record after Federal Reserve Chair Powell signaled potential rate cuts as early as September. The market's primary focus is now on Nvidia's (NVDA) highly anticipated earnings report on Wednesday, viewed as a critical litmus test for AI demand and broader tech sector sentiment, given the stock's 32% year-to-date surge. Investors will also monitor other tech earnings later in the week and Friday's July PCE inflation report, with core PCE expected to show a slight year-over-year increase to 2.9%.

Analysis

US equity futures are indicating a modest pullback of approximately 0.2% following a significant end-of-week rally, where the Dow Jones Industrial Average surged 1.8% to a new record of 45,631.74. This rally was primarily catalyzed by signals from Federal Reserve Chair Jerome Powell suggesting a potential initiation of rate cuts as early as September. The market's immediate focus is now on Nvidia's (NVDA) upcoming earnings report on Wednesday, which is widely viewed as a critical litmus test for both the sustained demand in the AI sector and the broader market's risk appetite. Analyst consensus anticipates Nvidia to report earnings of $1.01 per share on $46.13 billion in revenue, reflecting high expectations that have fueled the stock's 32% year-to-date gain. Beyond Nvidia, investors are also watching for Friday's July PCE inflation data, with economists forecasting a slight acceleration in the core year-over-year reading to 2.9% from 2.8%, a key metric that will influence the Federal Reserve's policy trajectory.

Key Decisions for Investors

• Investors should treat Nvidia's upcoming earnings as a pivotal market-wide catalyst; its results and forward guidance will likely determine near-term momentum for the tech sector and the broader AI investment theme.
• Given the market's recent rally was fueled by rate cut expectations, closely monitor Friday's PCE inflation report, as a reading above the forecasted 2.9% could reintroduce volatility and challenge the current dovish sentiment.
• Consider reviewing exposure to high-valuation technology stocks, as Nvidia's report could trigger significant price swings and potentially revive concerns about a rotation out of the sector if results disappoint.