Equity markets broadly retreated at the start of the week as investors brace for a pivotal earnings report from semiconductor and AI leader NVIDIA and keenly await fresh inflation data. Monday’s close saw major indices slip, pulled down by soft performances in consumer staples, health care, and utility sectors, while communication services and select energy stocks showed resilience. Bond yields in the U.S. resumed their climb, with the benchmark 10-year Treasury yield settling at 4.28%, however, still below its July highs.

Market Performance Recap: U.S. and Global Trends

Monday’s trade reflected mounting investor caution on the back of shifting macroeconomic dynamics and company-specific catalysts. The NASDAQ Composite and S&P 500 both snapped winning streaks, while the Dow Jones Industrial Average retreated from recent highs.
Internationally, Asian stocks surged as Hong Kong’s Hang Seng and mainland China’s Shanghai Composite both set new yearly highs, buoyed by tech and property gains and optimism over Beijing’s latest economic stimulus measures. Europe’s equity markets, conversely, pulled back even as Germany’s Ifo Business Climate Index notched an eighth consecutive monthly rise — hitting its best level in more than 24 months, signaling steady improvement in Europe’s largest economy.

The U.S. dollar advanced against major global currencies as investors sought safe-haven assets amid ongoing geopolitical risks and anticipation of U.S. inflation data. WTI crude oil prices increased, fueled by concerns over disruptions to Russian energy supplies and the threat of further U.S. sanctions following renewed attacks on critical infrastructure in Eastern Europe.

Spotlight: NVIDIA’s Earnings Hold Market Focus

All eyes turn to NVIDIA this week as the chipmaker is set to report quarterly results after the close on Wednesday. According to consensus estimates, NVIDIA is expected to post earnings per share of $1.01, marking a substantial 49% jump year-over-year. This dramatic growth underscores the extraordinary demand for advanced graphics and AI processing chips, which have made NVIDIA one of the world’s most valuable companies and a driving force behind this year’s technology rally.

The company’s earnings will serve as a bellwether for broader sentiment around artificial intelligence, with investors scrutinizing not only headline results but guidance around revenue, margins, and AI demand durability. NVIDIA’s surging stock has powered much of the S&P 500’s gains so far in 2025, reinforcing how pivotal big tech and AI infrastructure leaders have become for portfolio performance. Wall Street is looking for signals that AI-fueled growth remains robust and sustainable, especially as the sector’s valuations reach historic highs.

More broadly, 82% of companies reporting in the S&P 500 have exceeded analyst expectations with average earnings surprises of 8%, according to FactSet. This strong showing has led consensus expectations for second-quarter earnings growth to be revised sharply upward to 10.5% — a significant upgrade from the initial projection of 3.8%. The bulk of sectors, particularly technology, industrials, and financials, have reported year-over-year earnings increases; energy remains the key underperformer facing lower commodity prices and margin pressures.

Looking ahead, analysts anticipate a moderation in earnings growth through the rest of 2025, but the early-year momentum — including an impressive 12.8% rise in the first quarter — has set the stage for a projected 10.5% annual growth for the year. Sustained earnings expansion will be critical for supporting near-record highs in U.S. equity indices going forward.

Inflation and the Federal Reserve: Markets Watch for PCE Data

Another major catalyst this week will be Friday’s release of the July Personal Consumption Expenditures (PCE) price index. As the Federal Reserve’s preferred inflation barometer, PCE data is closely followed by policymakers and market participants alike. Expectations are for the headline annual PCE inflation rate to remain stable at 2.6%. However, the core PCE, which strips out volatile food and energy costs, is forecasted to tick up to 2.9% from last month’s 2.8%.

Despite inflation readings running persistently above the Fed’s 2% target, Chair Jerome Powell, during last week’s Jackson Hole Economic Policy Symposium, maintained that some tariff-related price increases are likely to prove temporary. Powell also flagged the possibility of shifts in monetary policy should further softening in the labor market appear, opening the door for interest rate adjustments ahead.

Current derivatives market pricing (per the CME FedWatch tool) signals expectations for two more policy rate cuts before year-end, most likely beginning in September, and another three across 2026. Additional easing could reduce borrowing costs for businesses and consumers, supporting continued economic growth amid moderating inflation and wage pressures. However, with bond yields still elevated, the trajectory of rates and inflation will remain a primary driver for market sentiment in the months ahead.

Global Backdrop: Geopolitics and Commodities

Persistent geopolitical tensions — such as ongoing hostilities in Ukraine and mounting risks to Russian energy exports — continue to challenge markets. The possible escalation of Western sanctions and retaliatory moves by Moscow add uncertainty for global supply chains, particularly in the energy and raw materials sectors. As of late August, oil prices have responded with upward moves, pressuring inflation expectations and complicating the monetary policy outlook, especially for energy-importing nations.

Currency strategists highlight that a stronger dollar has added volatility to global equity and debt markets, as investors reallocate capital in response to shifting risk assessments and the evolving policy landscape both in the U.S. and abroad.

Edward Jones Investment Policy Committee Perspective

The Edward Jones Investment Policy Committee (IPC) continues to advocate a long-term, diversified investment approach amid ongoing volatility. IPC’s members, drawing from expertise in economic analysis, asset allocation, and portfolio strategy, consistently review market conditions and provide updated guidance to help clients pursue financial goals through changing environments. As always, investors are reminded to balance risk, stay disciplined, and align investment choices with individual objectives and time horizons.

Important Note: This information is for educational purposes and should not be considered as personalized investment advice. Market conditions can change rapidly, and investors are urged to consult financial professionals and consider their own circumstances before making investment decisions.