Stocks struggled to maintain momentum heading into the weekend as fresh economic data reignited fears of sticky inflation and slowing economic growth. After hitting an all-time high on Wednesday, the S&P 500 (^GSPC) closed the week down 1.7%, while the Nasdaq Composite (^IXIC) lost 2%. The Dow Jones Industrial Average (^DJI) bore the brunt of the decline, tumbling nearly 3%.
Market Jitters Amid Economic Data
Investor sentiment took a hit following a disappointing earnings outlook from Walmart (WMT) and renewed concerns over inflationary pressures. As inflation remains above the Federal Reserve’s target and the labor market stays resilient, expectations for a Fed rate cut in the first half of 2025 have dimmed.
The upcoming release of the Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, on Friday is set to be a crucial data point. Economists project that core PCE for January will clock in at 2.6% annually, a slight decline from December’s 2.7%, but the monthly reading is expected to rise to 0.3%, up from the previous 0.2% increase. These numbers will be closely scrutinized, given the recent Consumer Price Index (CPI) report, which showed the biggest core inflation jump since April 2023.
Key Earnings in Focus: Nvidia Takes Center Stage
All eyes will be on Nvidia (NVDA) as it gears up to report its quarterly earnings after the bell on Wednesday. Analysts forecast the AI chip leader to post adjusted earnings per share of $0.84, marking a 63% jump from the previous year, alongside projected revenue of $38.26 billion, up 73% year-over-year.
Beyond the numbers, investors will be keen to hear CEO Jensen Huang’s insights on AI chip demand and potential competition from China’s DeepSeek. With most of the Magnificent Seven tech stocks underperforming relative to the S&P 500 in 2024, Nvidia’s results could serve as a crucial inflection point.
Bank of America analyst Vivek Arya noted that while volatility is expected post-earnings, Nvidia’s long-term prospects remain strong due to its next-generation chip lineup (GB300, Rubin) and expansion into robotics and quantum technologies, set to be unveiled at the upcoming GTC conference on March 17.
Economic Calendar: More Data to Watch
Aside from Nvidia’s earnings, several key economic reports are expected to drive market movements:
- GDP Second Estimate (Q4 2024) – A fresh look at economic growth trends.
- Consumer Confidence Data – Indicating the health of consumer sentiment amid economic uncertainty.
- Housing Price Index – Shedding light on real estate market trends amid higher-for-longer interest rates.
With inflation concerns lingering and interest rate cut expectations shifting, the upcoming data and earnings reports could shape the market’s next move. Investors will be closely watching how these developments impact stocks as they attempt to regain momentum.
