It looks like the market is in a wait-and-see mode as investors prepare for the release of the PCE price index, which will be a crucial indicator for the Federal Reserve’s next steps. With inflation being a key focus, the PCE report will likely determine whether the Fed feels confident enough to begin cutting rates in September. The market’s steady stance ahead of this report reflects the uncertainty around the inflation trajectory.

Thursday’s market performance showed a mix of reactions, with the Dow reaching an all-time high, while the S&P 500 remained flat and the Nasdaq edged lower. Nvidia’s significant drop suggests that there are growing concerns about whether the AI boom, which has driven much of the tech rally, has reached its peak. Meanwhile, the strong performances from Lululemon and Dell in after-hours trading indicate that investors are still rewarding companies that exceed expectations, despite broader market concerns.

The dollar’s recent strength seems to be a reaction to solid economic data, including the upward revision in GDP growth and better-than-expected jobless claims, which helped alleviate some recession fears. However, the dollar’s overall weakness this month reflects the market’s anticipation of a dovish turn from the Fed, especially if the PCE report confirms a downward trend in inflation.

The 10-year Treasury yield holding steady at around 3.86% suggests that bond markets are also in a holding pattern, awaiting the PCE data to provide more clarity on the Fed’s future rate path. Overall, the market appears to be bracing for key data that will either confirm or challenge the prevailing expectations of imminent rate cuts.

In summary, while the market is steady, there’s a clear sense of anticipation as investors look for confirmation that inflation is cooling, which could pave the way for the Fed to start easing policy as soon as September.

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