Dow holds steady at open after inflation tops expectations as Nvidia results loom

The S&P 500 was little changed Wednesday after the latest inflation data showed price pressures remain elevated.

The broad-market index rose 0.1%, while the Nasdaq Composite traded around the flatline. The Dow Jones Industrial Average gained 53 points, or 0.1%.

Inflation remains above Fed target

The personal consumption expenditures price index, the Federal Reserve's preferred inflation gauge, rose 0.2% on a seasonally adjusted basis in July, pushing the annual inflation rate to 3.7%, according to the Commerce Department.

Both readings were 0.1 percentage point above the Dow Jones consensus estimate.

Core PCE, which excludes volatile food and energy prices, increased 0.2% for the month and 3.3% from a year earlier, both matching expectations.

The Fed considers both measures, although policymakers generally view core inflation as a better indicator of underlying price trends.

The report also showed stronger-than-expected consumer activity. Personal income increased 0.4% in July, while personal spending rose 0.2%.

Goods prices declined 0.1% during the month, helped by a 2.7% drop in gasoline and other energy-related goods and a 0.9% decline in furnishings and durable household equipment.

Services prices increased 0.3%, driven partly by a 1.2% rise in financial services and insurance and a 0.3% increase in housing costs.

The data leave inflation above the Fed's 2% target as policymakers consider their next move.

The Federal Open Market Committee does not meet formally in August, giving officials more time before their next scheduled meeting on September 15-16.

Markets are pricing in roughly a one-in-three chance of a rate move in September, with December currently offering the strongest probability for a rate hike.

Nvidia earnings take center stage

Nvidia is scheduled to report its fiscal second-quarter earnings after the bell Wednesday, making the results a major focus for investors.

Wall Street expects earnings of $2.09 a share on $92.28 billion in revenue, according to FactSet.

The report could have implications beyond Nvidia itself because of the company's enormous weight in the broader market.

Nvidia is the largest S&P 500 company, with a market capitalization above $5 trillion.

Investors will be looking for evidence that AI infrastructure spending remains strong enough to support Nvidia's rapid revenue growth, while also watching the company's guidance for signs of whether that momentum can continue.

Fed speech also in focus

Investors are also looking ahead to Federal Reserve Chairman Kevin Warsh's speech Friday at the central bank's annual symposium in Jackson Hole, Wyoming.

The remarks could provide clues about the Fed's thinking on inflation and interest rates, although some investors expect Warsh to remain relatively cautious ahead of the September policy meeting.

For markets, the combination of sticky inflation and Nvidia's results creates two competing forces: higher-than-expected price pressures could limit expectations for easier policy, while a strong Nvidia report could reinforce confidence in the AI-driven earnings growth supporting equities.