S&P 500 Index: Bracing for Big Moves as Nvidia and PCE Take Center Stage

Nvidia, PCE, and a Narrow Market—Plenty on the Table This Week

We’re coming into the last week of August, and things feel stretched. The S&P’s been ripping since April—up close to 30%—but the rally’s been carried by a handful of names. Look, breadth is weak, valuations are rich, and earnings this week could tip the scales either way. There’s a lot on the line, and traders aren’t exactly on the same page.

Is Nvidia About to Prove AI’s the Real Deal—or a Crowded Trade Ready to Crack?

Here’s the thing: Nvidia’s earnings on Wednesday could either pour gas on the AI fire or throw cold water on the whole theme. Blackwell chip production’s ramping, and analysts are tossing out $5 to $8 billion in Q4 revenue targets. But competition’s heating up—AMD’s making moves, and big cloud players are cooking up their own silicon.

Margins are what I’m watching—can they stay in the mid-70s even with price pressure? Plus, China accounts for 15% of their business, and there’s talk of a revenue-sharing mandate. If the AI poster child stumbles here, we could see the broader tech trade back off fast.

Will Friday’s PCE Number Give the Fed a Green Light—or a Red Flag?

Now let’s talk inflation. Powell came off dovish at Jackson Hole, and the market jumped on it—pricing in a 70–83% shot at a rate cut next month. But that hinges on core PCE not creeping too high. Expectations are for a bump to 2.9% from 2.8%.

Tariffs are part of the mess—companies are passing on costs, and PMIs show the steepest price increases in a couple of years. So, the Fed’s got a real balancing act: the labor market’s cooling (jobless claims are up), but inflation’s still sticky. Bottom line? If Friday’s data surprises higher, rate cut odds might get slashed fast.

Rotation to Value: Real Deal or Just Another Head Fake?

Small caps and cyclicals popped last week—the Russell 2000 hit a fresh high, and value’s starting to attract some attention. But let’s not forget: growth still trades at a 16% premium to fair value, and AI’s the tailwind keeping it afloat.

Some folks think this rotation’s got legs—especially if rate cuts hit and we get a soft landing. But I don’t know… we’ve seen this movie before. Unless AI ROI starts to fizzle or economic growth stalls out, growth names might still hold the high ground.

Valuations Are Getting Stretched—Does the Market Care Yet?

The S&P’s pushing 26.7x price-to-peak earnings and 3.2x sales—nearly uncharted territory. That’s the 95th percentile historically, and with 10-year yields hanging around 4.27%, the math’s not exactly favorable.

UBS is calling for a 4.5% pullback, and Goldman’s pointing out the narrow leadership and risk of a top-heavy setup. The smart money’s cautious here—even if sentiment surveys scream “Goldilocks bull,” these kinds of setups don’t tend to end quietly.

My Take: Tighten Up, Watch Nvidia, and Brace for Volatility

This week’s going to test some big themes—AI conviction, inflation risk, and whether we’ve come too far, too fast. Nvidia’s the spark, Friday’s PCE is the fuse, and September seasonals don’t exactly inspire confidence. I’m keeping stops tight and looking at pullbacks as potential buying opportunities—but only in names that aren’t hanging on by a thread.

More likely than not, we get some volatility—how the market digests it will say a lot about where we go from here.

More Information in our Economic Calendar.