Stocks steady as hotter PCE keeps rates in focus while Wall Street waits on Nvidia

Daily Recap

U.S. equities finished nearly flat after a choppy session as July’s PCE inflation ran a touch hotter than forecasts, nudging Treasury yields higher and keeping rate sensitivity front and center; traders largely kept risk tight ahead of Nvidia’s after-hours report, leaving the S&P 500 hovering near record territory.

Key Headlines & Market Movers

Inflation a shade hot, rates edge up, stocks tread water: The Fed’s preferred gauge rose 0.2% on the month, keeping headline PCE at 3.7% year over year—slightly above consensus—while core held at 3.3%. That mix reinforced a “not done yet” feel on inflation and saw yields tick higher, but equity moves stayed contained as investors weighed whether the data meaningfully shifts the policy path. Spending growth eased, adding to the sense of a cooler but still resilient backdrop.

All eyes on Nvidia to confirm the AI spend story: With expectations sky-high, the market largely marked time into Nvidia’s print, mindful that guidance on data-center demand can sway broader tech sentiment. The setup followed Tuesday’s rebound in AI infrastructure and semis, helped by a pullback in oil and yields, which eased recent pressure on growth stocks. Today’s muted tape underscores how pivotal one mega-cap’s update has become for market leadership.

Sector crosscurrents amid mixed macro signals: Industrials led while health care and consumer discretionary lagged, reflecting a day where cyclicals outpaced more rate-sensitive pockets. The second estimate of Q2 growth held steady even as durable goods surprised to the upside, a combination that supports the “soft-landing” narrative without relieving the Fed of its inflation vigilance. Taken together, the macro tape offered just enough resilience to cap downside, but not enough surprise to break markets from their holding pattern.

S&P 500 Sector Performance

The next catalyst is whether Nvidia’s outlook validates continued AI-capex strength; from there, watch the bond market’s reaction to PCE and any follow-through in sector breadth. If yields keep grinding higher, leadership may stay narrow; a pullback in rates would give lagging areas a chance to re-engage.

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