Investors Hold Breath as Fed Signals Cuts, Eye Nvidia’s Next Move

Federal Reserve Chair Jerome Powell's remarks at the Jackson Hole economic forum have stirred significant market activity, with investors reacting to the possibility of interest rate cuts. In his speech, Powell emphasized the dual risks of a slowing labor market and persistently high inflation, signaling a potential shift in the Fed’s policy stance. His comments have been interpreted as a green light for a rate cut at the upcoming September 17 meeting — a move not seen since December 2024. Economists such as Heather Long of Navy Federal Credit Union have noted that Powell's remarks reflect a recalibrated view following unexpected weakness in July’s jobs report. This has led to a surge in Wall Street confidence, with the S&P 500 index rising by 1.3% shortly after the speech.

Powell’s message comes amid a backdrop of economic uncertainty, particularly concerning the labor market. Recent data has shown a significant slowdown in job creation, with downward revisions to May and June payroll gains highlighting a more fragile employment picture than previously indicated. At the same time, the Fed continues to monitor inflation, which remains above the central bank’s 2% target. Powell noted that President Trump’s proposed tariffs could lead to a temporary increase in inflation due to their effects on supply chains and distribution. While he described the inflationary impact as "one-time," he also acknowledged that the process could be prolonged due to ongoing changes in tariff rates.

The market’s immediate response to Powell’s speech has been reflected in the probability of a rate cut, which climbed to approximately 72% on the CME FedWatch tool based on 30-Day Fed Funds futures. This shift has helped ease investor concerns that had been building over the previous week as the S&P 500 had fallen for five consecutive sessions. However, the Fed’s dual mandate of maintaining low inflation and promoting employment remains a balancing act, especially in the context of Trump’s political pressures and the broader economic slowdown.

With the Fed's signal of potential rate cuts, attention is now turning toward the upcoming earnings report from Nvidia Corp., scheduled for Wednesday. The tech giant is seen as a bellwether for the broader stock market, particularly due to its dominant position in the AI sector and its influence on the S&P 500 index. Analysts are cautiously optimistic, with many raising price targets for Nvidia based on expectations of strong quarterly performance. However, concerns persist regarding the company’s exposure to trade restrictions, particularly in China, where recent policy changes have limited its ability to sell key AI chips. These trade dynamics add an additional layer of uncertainty to what is already a critical period for market stability.

Despite these challenges, Wall Street analysts continue to be bullish on Nvidia’s long-term prospects. Of the 13 analysts currently covering the stock, 12 have issued "buy" ratings, with price targets ranging from $155 to $225, indicating a strong belief in the company’s resilience and growth potential. The market’s reaction to the Fed’s message has already pushed Nvidia’s stock toward record highs, and the firm’s earnings report is expected to further influence investor sentiment in the near term.

Source: [1] Fed Chair Jerome Powell signals path to rate cuts in ... (https://www.cbsnews.com/news/jerome-powell-jackson-hole-speech-interest-rate-federal-reserve/) [2] Nvidia Earnings Are the Stock Market Risk Event After Fed ... (https://www.bloomberg.com/news/articles/2025-08-24/nvidia-earnings-are-the-stock-market-risk-event-after-fed-rally) [3] What Wall Street Analysts Think of Nvidia's Stock Ahead ... (https://www.investopedia.com/what-wall-street-analysts-think-of-nvidia-stock-ahead-of-earnings-wednesday-11796072)