U.S. Stocks May Open Roughly Flat As Traders Digest Nvidia Earnings

Stocks are set for a flat open Thursday as traders digest Nvidia's mixed Q2 results, which exceeded overall expectations but saw data center sales miss estimates, leading to a slight pre-market dip. This follows a significant upward revision of Q2 2025 GDP growth to 3.3% and a modest decrease in initial jobless claims, signaling economic resilience. Investors are now keenly focused on Friday's PCE inflation data, which is expected to show an uptick in core consumer price growth and could impact the highly anticipated September rate cut by the Federal Reserve.

Analysis

The market is exhibiting a cautious pause, with major index futures indicating a flat open after two sessions of gains that pushed the S&P 500 to a new record high. This hesitation is primarily driven by a mixed earnings report from market leader Nvidia, which, despite beating overall quarterly expectations, reported data center sales that fell short of estimates, leading to a 0.3% pre-market dip. This specific weakness contrasts with a robust macroeconomic backdrop, underscored by a significant upward revision in Q2 2025 GDP growth to 3.3%, surpassing the 3.1% consensus, and a resilient labor market evidenced by initial jobless claims dipping to 229,000. Investor focus is now squarely on Friday's Personal Consumption Expenditures (PCE) data, the Federal Reserve's preferred inflation gauge. The market is bracing for a potential uptick in the annual core rate to 2.9%, a critical data point that will test the current high market expectation of an 85.3% probability for a September rate cut.

Key Decisions for Investors

• Given the market's pause at record highs and conflicting signals from strong economic data versus mixed news from a bellwether like Nvidia, investors should consider maintaining current exposures while awaiting Friday's PCE data for a clearer directional catalyst.
• For those holding Nvidia, the miss in data center sales warrants close scrutiny as a potential moderation in a key growth engine; future performance may hinge on management's guidance for this specific segment.
• With an 85.3% probability of a September rate cut already priced in, a higher-than-expected PCE inflation reading poses a significant near-term risk, making it prudent to review portfolio hedges or trim exposure to highly rate-sensitive sectors ahead of the release.