This played out in last week's market action with the Russell 2000 Index (^RUT), which has many companies with more interest rate exposure than the S&P 500, falling nearly 4% compared to the S&P 500's 2.6% decline.
Nvidia is set to report quarterly results on Wednesday after the market close. Investors will be closely watching for any updates on demand from the leading supplier of AI chips. For the quarter, Nvidia is expected to report adjusted earnings per share (EPS) of $0.88 on revenue of $43.3 billion, according to Bloomberg analyst consensus data. The company reported adjusted EPS of $0.61 on revenue of $26 billion in the same period last year.
Read the full preview of Nvidia's results from Yahoo Finance's Dan Howley here.
Given Nvidia's position as one of the top holdings in the S&P 500, investors will also be watching how the report affects other tech stocks and the broader market. Shares of Nvidia are roughly flat this year after whipsawing amid growing fears of AI competition and tariff concerns.
Since the launch of ChatGPT in November 2022, Nvidia alone has accounted for about 17% of the S&P 500's gains.
Tariffs have increased fears that inflation could spike again. But there's been little evidence of a resurgence thus far in economic data, and economists expect a similar story to play out in the coming week.
A fresh look at a key inflation measure will come on Friday with the April PCE release. Economists project annual "core" PCE -- which excludes the volatile categories of food and energy -- to have clocked in at 2.5% in April, down from the 2.6% seen in March. Over the prior month, economists project "core" PCE at 0.1%, above the 0% seen the month prior.
BofA senior US economist Aditya Bhave wrote in a note to clients that the May inflation data, which will be released in June, will likely provide the "first read" of how tariffs are impacting prices.
Nvidia's earnings report will effectively mark the end of the first quarter reporting period for S&P 500 companies. With 93% of the index done reporting, S&P 500 companies are on pace to have grown earnings by 12.9% compared to the prior year, far above the 7.1% expected on March 31, per FactSet senior earnings analyst John Butters.
Butters's latest earnings research also showed that one of Wall Street strategists' looming fears heading into the reporting period never came to fruition. Despite heightened policy uncertainty, just eight companies withdrew their full-year earnings per share guidance. This is far lower than the 185 companies that withdrew guidance in the first quarter five years ago as the pandemic clouded the corporate operating outlook.
Confidence in corporates' ability to navigate tariffs has been a key theme backing the recent rally in the market and the reason strategists like Morgan Stanley chief investment officer Mike Wilson see stocks finishing 2025 higher.
"We continue to prefer US over international equities as earnings revisions start to inflect higher for the S&P 500 relative to MSCI ACWI Ex US (CWI)," Wilson wrote while defending his year-end S&P 500 target of 6,500.
Markets are closed for Memorial Day.
Economic data: FHFA house price index, month over month, March (+0.1% prior); S&P CoreLogic CS 20-city year over year, non-seasonally adjusted, March (4.5% prior); Conference Board Consumer Confidence, May (87 expected, 86 prior); Durable goods orders, April preliminary (-8.2% expected, +7.5% prior); Capital goods orders non-defense excluding air, April preliminary (0.1% prior); Dallas Fed manufacturing activity, May (-35.8 prior)
Earnings: AutoZone (AZO), Box (BOX), Okta (OKTA)
Economic data: MBA Mortgage Applications, week ending May 23 (-5.1% prior); Richmond Fed manufacturing index, May (-13 prior); FOMC meeting minutes, May meeting
Economic data: First quarter GDP, second revision (-0.3% annualized rate expected, -0.3% previously); First quarter personal consumption, second revision (+1.8% previously); Initial jobless claims, week ended May 24, (227,00 previously); Pending home sales month over month, April (+6.1% previously)
Earnings: American Eagle (AEO), Best Buy (BBY), Burlington Stores (BURL), Build-a-Bear Workshop (BBW), Costco (COST), Dell (DELL), Foot Locker (FL), Hormel Foods (HRL), Gap (GAP), Marvell Technology (MRVL), Ulta (ULTA), Zscaler (ZS)
Economic data: PCE inflation, month over month, April (+0.1% expected, 0% previously); PCE inflation, year over year, April (+2.2% expected, +2.3% previously); "Core" PCE, month over month, April (+0.1% expected, 0% previously); "Core" PCE, year over year, April (+2.5% expected; +2.6% previously); University of Michigan consumer sentiment, May final (50.8 prior)
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