Ahead of Jackson Hole, the S&P 500 was struggling to hold its uptrend while the VIX index started showing signs of anxiety, hinting at higher volatility. Powell’s comments on rising risks in the jobs market and his statement that “shifting balance of risks may warrant adjusting our policy stance” quickly changed the dynamic. Although the overall speech, including the framework change, was hawkish in the long term, it was dovish enough in the short term for the S&P 500 to keep its trend alive, at least for a little while longer. 

Now, markets are pricing an 85% probability of a rate cut, but several key factors could either support the trend or trigger a selloff before the September FOMC meeting. 

What to Watch for S&P 500? 

1. Nvidia Earnings: 

Over the last few years, artificial intelligence investments have been the main driver of market sentiment, with Nvidia at the center of that story. As long as Nvidia keeps growing rapidly, the broader market tends to follow. But if NVDA falls short of expectations, sentiment across the tech sector could sour quickly. 

Nvidia is expected to report Q2 earnings on Wednesday after the close, with consensus at $1.01 EPS, a 49.15% increase year over year. EPS growth is projected to slow to 49% in Q3, still strong but less explosive than previous quarters. Nvidia has consistently beaten expectations, and if that continues with solid guidance for the rest of the year, the S&P 500 should stay supported. But if either the earnings or projections disappoint, tech stocks could take a hard hit. 

2. Trump–Cook Showdown: 

Trump announced he had fired Fed Governor Lisa Cook over mortgage policy, but Cook responded that Trump has no authority to do so. Political pressure on the Fed is not new, but renewed questions about central bank independence are a clear negative for markets. Even if Trump pushes for rate cuts, which could look positive for equities in the short term, any perception of compromised Fed independence would damage medium- to long-term investor confidence. News flow around this dispute needs to be monitored closely. 

3. Incoming Data: 

The most important catalysts will be the upcoming PCE, payrolls, and CPI reports ahead of the September meeting. Supporting data from ISM and JOLTS could also move markets. Both PCE and CPI are expected to rise further, but a faster pace could threaten the likelihood of cuts. 

Next week’s payrolls report could be the real gamechanger. Too weak a report raises stagflation risks, while too strong a report reduces the odds of cuts. Barring an inflation surprise to the upside, the Fed still appears on track for a cut in September. 

(S&P 500) 

Technical Picture 

The S&P 500 trend channel remains intact, but the last three peaks have each been lower than the previous one, a bearish warning. Valuations remain high, the index has rallied 33% off the April bottom, and market breadth is weakening. These signals of fragility have been present for two months, yet the index continues to hold. 

The lower line of the rising channel is now at 6355 and climbing. As long as the trend channel holds, there is little reason to bet against the market, which often pushes higher even in less supportive conditions. But if the index breaks below the channel, caution will be necessary as sentiment could deteriorate quickly.