Markets spent the week trying to decipher various plot twists. Including whether to cheer artificial intelligence or worry about the Federal Reserve drawing a hard line. They ended up doing a little of both, which is Wall Street’s version of walking and chewing gum. The result was a choppy Friday after a tech-led bounce, with traders pricing a higher chance of a September rate hike even as chip stocks tried to steal the show. Since last Friday’s close the S&P 500 gained 38 points or .5%, the NASDAQ advanced 222 points or .85% while the DOW gained 283 points or .53%.
Warsh Draws a Hard Line
The main event arrived Friday in Wyoming, where new Fed Chair Kevin Warsh delivered his first Jackson Hole keynote. He took a hard line, denying the market a tidy rate path. Stating inflation remains “more concerning,” financial conditions do not look especially tight, and officials will “have work to do” unless they become confident prices are heading to 2 percent at a decent clip. Traders heard a hawk.
Odds of a September hike jumped toward the 50–60 percent range after the speech, two-year yields popped, and stocks gave back some of Thursday’s Nvidia-fueled gains. Warsh also took another swipe at forward guidance, which is central-bank speak for “stop asking us to write your calendar.” The next real tests are the August jobs report and CPI. Until then, the chair has politely reminded everyone that 2 percent is still the assignment.
Nvidia Keeps the Artificial Intelligence Boom Alive
Wednesday night added to the plot twists and belonged to Nvidia earnings report. Revenue more than doubled to $96.2 billion, data-center sales hit $89 billion, and the company guided the current quarter to about $108 billion. As AI or artificial intelligence continues to drive the bus. Then the CFO went further, pointing to roughly 70 percent growth into fiscal 2028 and saying customer forecasts imply even more if supply were not the bottleneck.
Jensen Huang’s line that “compute is revenue” is the kind of slogan that makes portfolio managers check their weightings twice. Shares ripped higher Thursday and helped lift the Nasdaq more than 1.5 percent. Salesforce and CrowdStrike joined the party. The AI trade is not subtle, and this week it refused to fade just because someone in Jackson Hole was talking about price stability.
Adding To The Plot Twists, Sticky Prices, Softer Growth
Wednesday’s data dump was the other half of the story. The second estimate left second-quarter GDP at a modest 1.5 percent annual rate, though consumer spending was revised up to 3.4 percent. July core PCE, the Fed’s favorite inflation gauge, rose 0.2 percent on the month and held at 3.3 percent year over year. Headline PCE stayed at 3.7 percent.
In other words, the economy is still expanding, households are still spending, and prices are not rolling over the way doves hoped. Real spending was essentially flat in July once you strip out inflation. That combination—decent demand, stubborn services inflation—is exactly why Warsh sounded unhurried about cutting and took a harder line on another rate hike if August data stay’s firm.
Jobs Data Get a Quiet Rewrite
Friday also brought the Bureau of Labor Statistics’ preliminary benchmark revision. Payrolls through March 2026 look about 79,000 lower than first reported, or roughly 0.1 percent of employment. Private payrolls were marked down more. Last year’s revision was a jaw-dropper near 900,000. This one is small enough that it did not rewrite the labor story, but it did confirm the “low-hire, low-fire” slog has been a touch weaker than the monthly prints suggested. Economists had actually expected an upward revision, so the miss was a mild disappointment rather than a crisis. Still, it sits awkwardly next to Warsh’s claim that the jobs market looks consistent with full employment. The September employment report now carries extra weight.
Oil Bets on an Off-Ramp
Away from the Fed and the chip foundries, crude spent the week sliding on hopes that talks involving Iran and Oman might eventually ease the Strait of Hormuz bottleneck. Brent drifted into the mid-80s as traders priced diplomacy faster than actual tanker traffic, which remains well below pre-war levels. Energy is still a tax on consumers and a wildcard for inflation, which is why a softer oil tape matters even when Nvidia is printing record numbers. If the waterway stays tight, the next CPI print will notice. If flows recover, the Fed gets a small gift.
Taken together, the weeks plot twists left stocks near recent highs, rate-hike bets higher, and the AI narrative intact. That is not a tidy ending. It is a market waiting for August payrolls and prices to decide whether Warsh’s “work to do” becomes a September meeting or just another speech in the mountains.
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