Stocks and data to watch the week of August 25 though 29

Following last week's dovish signals from Fed Chair Powell that spurred broad equity gains (S&P 500 +1.5%), the upcoming week features critical economic data and corporate earnings to test the 'soft-landing' narrative. Key events include housing data, durable goods, and significant AI earnings from Nvidia and other tech firms, which will influence broader risk appetite. The week culminates with Friday's core PCE inflation data, the Fed's preferred gauge, alongside personal income and consumer sentiment, which will be pivotal for repricing September rate-cut odds and the 2025 monetary policy path, with retail earnings offering further insight into consumer resilience.

Analysis

Markets enter the week with bullish momentum following Federal Reserve Chair Jerome Powell's dovish signaling at Jackson Hole, which catalyzed a 1.5% rise in the S&P 500 and a 3.9% rally in small caps. This optimism, however, faces a significant test from a dense schedule of economic data and corporate earnings that will either validate or undermine the prevailing 'soft-landing' narrative. The week's data flow is structured to provide a comprehensive economic snapshot, beginning with a sequence of housing reports that will gauge the impact of elevated mortgage rates on activity and pricing. Mid-week, attention will shift to durable goods orders for insight into capital expenditures, followed by a crucial cluster of earnings reports. The technology sector's outlook hinges on results from Nvidia, described as the 'most systemically important company in AI,' alongside Snowflake and CrowdStrike, which will offer clarity on enterprise spending and cloud demand. Concurrently, a broad cross-section of retailers, including Dollar General, Best Buy, and Foot Locker, will report, providing a direct check on the 'resilient consumer' thesis amid back-to-school season. The week culminates with Friday's release of the core PCE price index, the Federal Reserve's preferred inflation gauge, which stands as the most consequential catalyst for monetary policy expectations and could rapidly reprice the odds of a September rate cut.

Key Decisions for Investors

• Given the high-impact nature of the week's economic calendar, particularly the core PCE data and Nvidia's earnings, investors should anticipate heightened market volatility and may consider reviewing portfolio risk exposure.
• Pay close attention to commentary from Nvidia and other tech firms on enterprise spending and AI demand, as these results are positioned to be a significant catalyst for the tech-heavy market and overall risk appetite.
• Scrutinize the earnings reports from the diverse slate of retailers to assess the health of the consumer, watching for evidence of trading down which could signal a need to re-evaluate exposure to consumer discretionary stocks.
• The trajectory of short-term Treasury yields and the U.S. dollar will be highly sensitive to Friday's PCE inflation reading, making it a critical data point for adjusting fixed income and currency positions based on shifting Fed rate cut probabilities.