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Nvidia, PCE, and Warsh: The Week That Decides September
Some weeks the market drifts. This is not one of them.
Between Wednesday and Friday, investors will get the Federal Reserve’s preferred inflation gauge, a referendum on the AI trade, and the first Jackson Hole address from a new Fed Chair — in that order, and in just over 48 hours.
Each is capable of moving markets on its own. Arriving together, three weeks before a September FOMC meeting, they make this the most consequential stretch of the late summer.
Markets enter it on unsteady footing. All three major averages posted losses last week despite Friday’s rebound. More telling, the semiconductors remain in a deep correction off the June highs, in what has morphed into an unusually persistent losing streak for the year’s leadership group.
Wednesday Morning: The Inflation Print
During pre-market trading early Wednesday morning, the Bureau of Economic Analysis will release the July Personal Income and Outlays report, containing core PCE — the inflation measure the Fed actually targets.
Expectations are for grudging progress at best. The consensus calls for headline PCE easing marginally to 3.6% while core holds steady at 3.3%. Neither figure is close to the Fed’s 2% objective, and core PCE has been stuck in the low-3% range for months after touching a multi-year high this spring.
Still, much of the headline pressure has been energy-driven, a consequence of the Iran conflict rather than an overheating domestic economy. That doesn’t change the fact that the 3.3% core figure is a difficult number for a central bank that has now spent a year explaining why it hasn’t reached target. A downside surprise would meaningfully reduce September hike risk. An upside surprise would put a hike squarely back on the table.
Wednesday Evening: Nvidia’s Referendum
Nvidia reports fiscal second-quarter results on Wednesday after the close, and the setup is genuinely fascinating.
The numbers themselves should be spectacular. Management guided to revenues of $91 billion, plus or minus 2%, and the Zacks Consensus Estimate sits at $91.85 billion — a staggering 96.5% increase from the year-ago figure.
On the bottom line, consensus calls for $2.09 per share, revised two cents higher over the past 60 days and implying 99% growth from the $1.05 posted a year ago. Nvidia has surpassed the Zacks Consensus Estimate in each of the trailing four quarters, averaging a 5.5% surprise.
Image Source: Zacks Investment Research
Here is the uncomfortable part: recent history suggests a beat may not be enough. Each of Nvidia’s last several beats was met with a decline in the shares. The market has priced in excellence and now demands perfection.
That is why the guidance line matters more than the quarter. The unofficial bar for October-quarter revenue guidance sits near $102 billion, and anything meaningfully below that risks reviving the selloff. Gross margin around 73.5% is the moat metric — any compression there would be read as pricing pressure from custom silicon at the hyperscalers, which is the heart of the bear case.
For what it’s worth, Nvidia (NVDA - Free Report) carries a Zacks Rank #3 (Hold) into the print. Our model predicts another beat for Wednesday’s announcement and sees estimate revisions as balanced rather than accelerating — a reasonable posture for a company whose fundamentals are extraordinary but whose expectations have caught up to them.
Friday at 10 a.m.: Warsh Takes the Podium
Of course, all eyes will turn to Kevin Warsh as the new Fed Chair delivers his first Jackson Hole keynote speech.
The symposium runs August 27th through the 29th at Jackson Lake Lodge under the theme “Financial Innovation: Implications for Payments and Policy,” with roughly 120 central bankers from more than 70 countries attending. Nobody expects Warsh to talk much about payments.
What makes this genuinely unpredictable is the committee he leads. At the July meeting, the Fed held rates at 3.50%–3.75%, but three regional bank presidents dissented in favor of a hike — the first time in many years that three policymakers broke ranks in the same direction. Roughly half of FOMC participants had penciled in hikes for 2026 at Warsh’s first meeting in June. That is an extraordinary level of internal division for a chair just months into the job.
Warsh has also deliberately narrowed forward guidance since taking office, and at the July press conference described his August remarks like “a blank sheet of paper.” A Bank of America survey found 69% of fund managers expect a neutral tone. When the entire market expects nothing, the cost of saying something rises considerably.
Bottom Line
The three events will undoubtedly interact with each other. If PCE runs hot and Warsh sounds hawkish, long yields rise — and every high-multiple AI name gets repriced regardless of what Wednesday’s earnings showed.
If PCE cools and Warsh looks through it, the rate-sensitive rotation we saw after last week’s Treasury buyback announcement extends, and the chip selloff likely finds a floor. Just nineteen days separate Jackson Hole from the September 16th FOMC decision, with the August jobs report and August CPI still to come in between.
This week will not settle the rate debate. What it will do is establish the framework everyone uses to interpret those prints.
View the Zacks #1 Rank List
Image: Shutterstock
Nvidia, PCE, and Warsh: The Week That Decides September
Some weeks the market drifts. This is not one of them.
Between Wednesday and Friday, investors will get the Federal Reserve’s preferred inflation gauge, a referendum on the AI trade, and the first Jackson Hole address from a new Fed Chair — in that order, and in just over 48 hours.
Each is capable of moving markets on its own. Arriving together, three weeks before a September FOMC meeting, they make this the most consequential stretch of the late summer.
Markets enter it on unsteady footing. All three major averages posted losses last week despite Friday’s rebound. More telling, the semiconductors remain in a deep correction off the June highs, in what has morphed into an unusually persistent losing streak for the year’s leadership group.
Wednesday Morning: The Inflation Print
During pre-market trading early Wednesday morning, the Bureau of Economic Analysis will release the July Personal Income and Outlays report, containing core PCE — the inflation measure the Fed actually targets.
Expectations are for grudging progress at best. The consensus calls for headline PCE easing marginally to 3.6% while core holds steady at 3.3%. Neither figure is close to the Fed’s 2% objective, and core PCE has been stuck in the low-3% range for months after touching a multi-year high this spring.
Still, much of the headline pressure has been energy-driven, a consequence of the Iran conflict rather than an overheating domestic economy. That doesn’t change the fact that the 3.3% core figure is a difficult number for a central bank that has now spent a year explaining why it hasn’t reached target. A downside surprise would meaningfully reduce September hike risk. An upside surprise would put a hike squarely back on the table.
Wednesday Evening: Nvidia’s Referendum
Nvidia reports fiscal second-quarter results on Wednesday after the close, and the setup is genuinely fascinating.
The numbers themselves should be spectacular. Management guided to revenues of $91 billion, plus or minus 2%, and the Zacks Consensus Estimate sits at $91.85 billion — a staggering 96.5% increase from the year-ago figure.
On the bottom line, consensus calls for $2.09 per share, revised two cents higher over the past 60 days and implying 99% growth from the $1.05 posted a year ago. Nvidia has surpassed the Zacks Consensus Estimate in each of the trailing four quarters, averaging a 5.5% surprise.
Image Source: Zacks Investment Research
Here is the uncomfortable part: recent history suggests a beat may not be enough. Each of Nvidia’s last several beats was met with a decline in the shares. The market has priced in excellence and now demands perfection.
That is why the guidance line matters more than the quarter. The unofficial bar for October-quarter revenue guidance sits near $102 billion, and anything meaningfully below that risks reviving the selloff. Gross margin around 73.5% is the moat metric — any compression there would be read as pricing pressure from custom silicon at the hyperscalers, which is the heart of the bear case.
For what it’s worth, Nvidia (NVDA - Free Report) carries a Zacks Rank #3 (Hold) into the print. Our model predicts another beat for Wednesday’s announcement and sees estimate revisions as balanced rather than accelerating — a reasonable posture for a company whose fundamentals are extraordinary but whose expectations have caught up to them.
Friday at 10 a.m.: Warsh Takes the Podium
Of course, all eyes will turn to Kevin Warsh as the new Fed Chair delivers his first Jackson Hole keynote speech.
The symposium runs August 27th through the 29th at Jackson Lake Lodge under the theme “Financial Innovation: Implications for Payments and Policy,” with roughly 120 central bankers from more than 70 countries attending. Nobody expects Warsh to talk much about payments.
What makes this genuinely unpredictable is the committee he leads. At the July meeting, the Fed held rates at 3.50%–3.75%, but three regional bank presidents dissented in favor of a hike — the first time in many years that three policymakers broke ranks in the same direction. Roughly half of FOMC participants had penciled in hikes for 2026 at Warsh’s first meeting in June. That is an extraordinary level of internal division for a chair just months into the job.
Warsh has also deliberately narrowed forward guidance since taking office, and at the July press conference described his August remarks like “a blank sheet of paper.” A Bank of America survey found 69% of fund managers expect a neutral tone. When the entire market expects nothing, the cost of saying something rises considerably.
Bottom Line
The three events will undoubtedly interact with each other. If PCE runs hot and Warsh sounds hawkish, long yields rise — and every high-multiple AI name gets repriced regardless of what Wednesday’s earnings showed.
If PCE cools and Warsh looks through it, the rate-sensitive rotation we saw after last week’s Treasury buyback announcement extends, and the chip selloff likely finds a floor. Just nineteen days separate Jackson Hole from the September 16th FOMC decision, with the August jobs report and August CPI still to come in between.
This week will not settle the rate debate. What it will do is establish the framework everyone uses to interpret those prints.