Hotter Inflation Pressures Stocks as NVIDIA and Jackson Hole Loom

S&P 500 Index (SPX) futures are slightly lower after inflation came in a little hotter than expected, but the move remains modest as the market waits for NVIDIA earnings and Kevin Warsh’s Jackson Hole speech. The bigger question is whether inflation, Treasury yields, and the dollar begin putting more pressure on stocks, or whether the market can continue holding its bullish technical structure.

Headline PCE inflation came in at 3.7% versus the 3.6% estimate, while core PCE, which removes food and energy, came in at 3.3%, in line with expectations. Headline PCE on a month-over-month basis was slightly hotter, while core PCE was in line. Personal income was somewhat better than expected, personal spending was hotter, and real consumption stalled. Real GDP was in line, the GDP price index came in at 6.4%, and the previous core PCE reading was revised higher.

Despite those numbers, there is still no expectation for a rate hike in September, and October is also favoring no hike. That keeps Friday’s 10:00 AM Jackson Hole speech especially important because it could change how the market views monetary policy going forward.

For the S&P 500, the technical structure is still bullish as long as price remains above the key pivot area. A break below the 75 to 70 level would move the market into a neutral zone. A break below the larger supporting trend line would be more serious and increase the risk of a broader breakdown. For now, the index has mostly moved sideways over the last three days while investors wait for these major catalysts.

The U.S. Dollar Index (DXY) is moving higher after the inflation report, which makes sense because hotter inflation can increase expectations for tighter monetary policy. Even with today’s move, the larger structure still resembles a bear flag. A more hawkish message Friday could push the dollar higher, potentially back toward the previously broken trend line. A more dovish message could allow the bearish structure to resume.

The U.S. 10 Year Treasury Yield (US10Y) is also bouncing slightly after falling sharply over the previous day. The main technical area remains the trend line extending from the March lows.

That brings us to NVIDIA Corporation (NVDA), which is probably the biggest immediate equity catalyst. NVIDIA had been falling for more than a week before bouncing yesterday, and the options market is pricing an earnings move of approximately 5.9% in either direction. There is also significant call buying at higher strikes, including the $230 calls, suggesting some larger participants are positioning for an upside move greater than the 5.9% currently implied. That does not guarantee the direction, but it does tell us where some of the larger positioning is concentrated.

Intuit Inc. (INTU) is under pressure after earnings and traded as low as approximately $300 after hours. The important level is around the $296 gap fill, which also sits below the previous after-hours low and the psychological $300 level, while lining up with a Fibonacci retracement zone.

Zoom Communications, Inc. (ZM) is down approximately 5% after earnings. Aggressive support is around $292.50. The $188 gap fill is another level of interest, while $92.50 could also produce a technical bounce.

Abercrombie & Fitch Co. (ANF) is moving higher after better-than-expected earnings. The stock has already reached a gap fill area, so the next important resistance is the double top between $132 and $133. That strength comes one day after DICK'S Sporting Goods, Inc. (DKS) suffered a sharp decline following its earnings report, showing just how selective this market remains.

In commodities, Gold Futures (GC) are pulling back as the dollar and Treasury yields move higher. Inflation can support gold over the longer term, and the roughly $40 trillion national debt remains part of that larger argument, but rising yields driven by hotter inflation are creating short-term pressure.

Silver Futures (SI) are also pulling back slightly. The more attractive technical setup would come from a retracement toward the descending trend line that previously acted as resistance and could now become support.

Crude Oil Futures (CL) remain inside a wedge after being rejected from the upper resistance trend line earlier in the week. Natural Gas Futures (NG) are again testing an important trend line. Price has moved above it several times before and then been rejected, so a confirmed close above it would improve the near-term bullish setup. The next catalyst is the 10:30 inventory report.

Bitcoin (BTC) also deserves caution here. Bitcoin broke higher and formed a bull flag, but the short-term outlook has now shifted bearish because price has reached an area where several resistance signals are coming together. That does not answer whether the cycle low is already in, but it does increase the probability of a retracement.

The next important downside area is the low to mid $70,000s. If Bitcoin reaches that zone, I would focus on how price behaves around the Fibonacci retracement levels before making another directional decision.

Right now, patience matters. The S&P 500 is still holding its bullish structure, NVIDIA earnings could move technology sharply, inflation is pushing yields and the dollar higher, and Bitcoin is testing meaningful resistance. I would rather let price confirm the next move than chase it before the market shows its hand.