Stock futures are little changed after Dow's record close, as traders await Nvidia earnings: Live updates

U.S. equity futures were flat Sunday night following Friday's significant rallies across the Dow, S&P 500, and Nasdaq, which were propelled by Federal Reserve Chair Jerome Powell's Jackson Hole speech signaling potential monetary policy easing and boosting September rate cut expectations to 84%. Looking ahead, market focus shifts to key tech earnings, notably Nvidia, which will be crucial in determining the sustainability of the tech rally versus a rotation into cyclical/value stocks, alongside the highly anticipated July Personal Consumption Expenditure (PCE) inflation data.

Analysis

U.S. equity futures are holding flat after a significant rally on Friday, where the Dow Jones Industrial Average surged 1.89% to a new record, the S&P 500 gained 1.52% to approach its all-time high, and the Nasdaq Composite rose 1.88%. The rally was catalyzed by comments from Federal Reserve Chair Jerome Powell, which signaled a potential start to monetary policy easing as soon as next month, pushing market-implied odds for a September rate cut to 84% according to CME's FedWatch tool. This dovish shift has created a pivotal moment for the market, highlighting a potential rotation out of technology stocks and into cyclical and value names. The sustainability of the prevailing tech-led rally now faces a critical test with upcoming earnings reports, most notably from Nvidia on Wednesday, followed by Dell and Marvell on Thursday. Further market direction will be influenced by Friday's release of the July PCE price index, the Fed's preferred inflation metric, where consensus forecasts point to a slight acceleration in the core annual rate to 2.9% from 2.8%, a data point that could temper easing expectations.

Key Decisions for Investors

• Investors should closely monitor upcoming earnings from Nvidia, Dell, and Marvell, as these results are positioned as key determinants for the continuation of the tech rally versus a broader market rotation.
• Given the forecast for a slight acceleration in the core PCE inflation gauge to 2.9%, it is prudent to consider the risk that a higher-than-expected inflation print could quickly reverse the dovish sentiment and dampen expectations for a September rate cut.
• Consider portfolio positioning in light of the potential rotation from growth-oriented technology stocks into cyclical and value sectors, which could gain momentum if the Federal Reserve confirms an easing cycle.