U.S. stocks climbed on Friday after Federal Reserve Chair Jerome Powell hinted that interest rate cuts are on the horizon.
The Dow Jones Industrial Average rose by 462.30 points, or 1.14%, reaching 41,175.08. The Nasdaq Composite saw a 1.47% increase, closing at 17,877.79, while the S&P 500 gained 1.15%, ending the day at 5,634.61—just shy of the all-time highs reached last month.
Friday’s performance also capped off a winning week for all three major indexes. The Dow advanced nearly 1.3%, the Nasdaq gained 1.4%, and the S&P 500 climbed 1.45%.
The markets received a boost Friday morning following Powell’s remarks at Jackson Hole, Wyoming, where he signaled potential reductions in interest rates. However, he stopped short of detailing the timing or scale of any future rate cuts.
This week, the durable goods report is set to be released on Monday, and the core PCE inflation report on Friday. This data comes ahead of a busy period after Labor Day.
Economists at JPMorgan (NYSE:JPM), anticipate that the core PCE figure will show a 0.12% month-over-month increase. This projection, based on existing data from the CPI, PPI, and import price index, is expected to keep the year-over-year rate steady at 2.6% for the third consecutive month. However, on a three-month annualized basis, prices would be up only 1.6%.
“Recent FOMC communication indicates the Fed’s focus has shifted toward labor market risks and that inflation is close enough to target to facilitate cutting rates starting in September,” economists said. “We also forecast the headline index rose 0.1%m/m."
Nvidia to release its much-anticipated earnings
Apart from the two reports related to the U.S. economy, much of investors’ focus this week will be directed at the upcoming Nvidia earnings.
The chipmaker, seen as the vanguard of the ongoing AI revolution, will report financial results for fiscal Q2 2025 after the market closes on Wednesday.
The market expects NVIDIA Corporation (NASDAQ:NVDA) to report quarterly results ahead of consensus estimates, but the primary focus will likely be on the company’s guidance, as investors remain skeptical about the sustainability of AI adoption.
Investors will also be closely watching for any updates from management on potential delays in the launch of the next-generation Blackwell chip. According to supply chain checks, performance issues have led to a chip respin involving the Blackwell tile, resulting in a one-quarter delay.
However, KeyBanc Capital Markets analysts recently said that this "is not expected to have any impact to near-term results and guidance."
"We believe modest expectations for Blackwell shipments in FQ3 have been backfilled with higher Hopper bookings," they noted.
Other companies that will report earnings this week are CrowdStrike (NASDAQ:CRWD), HP (NYSE:HPQ), Salesforce (NYSE:CRM), Lululemon Athletica (NASDAQ:LULU), and MongoDB (NASDAQ:MDB).
What analysts are saying about US stocks
Citi: “The S&P 500 has now mostly round tripped the mid-July to early August drawdown and is hovering near our 5600 year-end target. With the index PE back to 23x trailing, we suggest a balanced risk/reward in the shorter term. Generally, Q2 results were a “beat and hold” as we expected. Q2 upside was balanced with some downside to 2H expectations.”
Deutsche Bank (ETR:DBKGn): "Inflows to equity funds ($20.4bn) rose to the highest in a month, stretching the current streak to an 18th straight week, with total inflows of almost $250bn over this period. These strong inflows are especially notable in a period of typically weak seasonality. In our reading, the risk appetite evident in equity inflows remains very strong, pointing to likely occasional pullbacks on late cycle concerns, and domestic or international political escalations, but also sharp buy-the-dip rallies."
Jefferies: "Risky assets are back to highs after wobble in early August. The early August move was driven by positioning and technicals, hence was a fade. Market was very long equities towards end July and hence the reaction to weaker employment numbers was exaggerated. However, we are keeping our risk positions small for now while keeping a medium term bullish view."