PCE runs hot. Then Nvidia answered

Rundown · 2026-08-27

Two prints, twelve hours apart. Headline PCE ran 3.7% year over year against a 3.6% forecast, core held at 3.3%, and the 10Y ticked up to 4.65% — leaving the indexes flat into the close. Then Nvidia guided the October quarter to $108B against $104.2B expected, with no China data center revenue in the number at all.

Market Performance

• S&P 500: 7,675.70 (-0.02%) — -1.58 pts, effectively unchanged
• Nasdaq: 26,130.20 (-0.08%) — -21.10 pts
• Dow: 53,463.88 (-0.21%) — -113.52 pts, the weakest of the three
• 10Y: 4.65%, edging up as the inflation print landed
• WTI: about $82 · Gold: $4,641.80 (-0.25%)
• The whole session was a holding pattern. Volume and conviction were parked ahead of Nvidia

Worth being precise about the shape: all three indexes finished lower, but by fractions. The Dow's 0.21% was the largest move of the day, and the Nasdaq's 0.08% was noise. This was not a market reacting to inflation — it was a market refusing to act before 4pm.

PCE Runs Hot and the Tape Shrugs

• Headline PCE rose 0.2% in July against a 0.1% forecast, taking the annual rate to 3.7% versus 3.6% expected
• Core PCE, the Fed's preferred gauge, rose 0.2% month over month and held at 3.3% year over year — in line, and still 1.3 percentage points above the 2% target
• The composition is the part that matters. Goods prices fell 0.1% on lower gasoline and household equipment, while services inflation rose 0.3%
• That split is the whole problem. Goods disinflation is doing the work, and it is the part crude just made easier. Services is the sticky half, and nothing in this print touched it
• The 10Y ticked up to 4.65%, giving back part of Tuesday's oil-driven rally
• For a Fed with three members already voting to hike, an above-forecast headline and a core stuck at 3.3% is not the print that settles the argument
• CPI and the next labor reads land before the September 16 FOMC — those, not this, decide it

Nvidia Answers After the Bell

• Revenue of $81.615B, up 85% year over year, with non-GAAP EPS of $1.87
• Data Center revenue reached $75.246B, and networking rose 199% on demand for InfiniBand, Spectrum-X and NVLink
• The guide is what moved it: $108B for the current quarter, plus or minus 2%, against $104.2B expected — roughly $4B above consensus
• That outlook includes no data center sales from China at all. The upside is being generated entirely without the market everyone spent last year arguing about
• Gross margin is guided down to 74%, the one number bears will point at
• Alongside it, Amazon Web Services committed to buying 2 million Nvidia GPUs and adopting the new Vera CPU
• Jensen Huang went further, forecasting roughly 70% revenue growth for fiscal 2028, far above where the Street sits
• The stock jumped after hours. Salesforce also rose about 13% post-close, so Thursday opens with two large AI-adjacent beats in hand

Retail's Two-Speed Tape

• Abercrombie & Fitch surged after a genuinely enormous beat: adjusted EPS of $4.17 against a $1.98 consensus — more than double
• Revenue came in at about $1.3B, up 5%, a record second quarter and its 15th consecutive quarter of growth, with operating margin near 20%
• Management raised the full year to $13.10-13.60 diluted EPS with at least $500M of buybacks
• Hold that against Tuesday, when Dick's Sporting Goods fell 30.7%, its worst day on record, on a Foot Locker writedown
• Same sector, same week, opposite outcomes. The market is not selling retail — it is sorting it
• The dividing line is not the consumer. It is whether management has control of its own inventory, brand and balance sheet

Notable Movers

• (ANF) +36% — Adjusted EPS of $4.17 against $1.98 expected, record Q2 revenue of about $1.3B, and a raised full-year outlook to $13.10-13.60 with $500M+ in buybacks
• (CRM) +13% after hours — Beat and rallied post-close, adding to the AI-adjacent momentum Nvidia set off
• (SEDG) +10.7% — UBS upgraded the solar technology company to Buy from Neutral
• (SNAP) -8.5% — One of the day's worst large-cap performers
• (ZM) -6.2% — Third-quarter EPS guidance of $1.46-1.48 missed the $1.50 consensus. A two-cent miss, and the multiple did the rest
• (CRWD) +2.1% — Firmed ahead of its own results

Cross-Asset

A quiet session in everything except the thing that reports at 4pm:

Asset · Level · Change · Driver

10-Year yield · 4.65% · edged up · Headline PCE above forecast

WTI crude · about $82 · roughly flat · Holding after Tuesday's 4.6% drop

Gold · $4,641.80 · about -0.25% · Slight give-back, still near three-month highs

• Crude stabilising near $82 is its own quiet story. The two-day collapse from $87 did not extend, but it did not reverse either
• That matters for the goods half of the inflation print. If crude holds here, September's goods reading gets easier again
• Gold barely moved after its run to three-month highs, and the bond move was small. Nothing repriced on this print — the market treated 3.3% core as confirmation of a range it already knew

Private Dealmaking

• Vanguard agreed to acquire Altruist, a custody and software platform for registered investment advisers — $4.6B (an acquisition, not a raise)
• Dogotix (robotics subsidiary of Xpeng) — $900M
• Gatik (self-driving box trucks for middle-mile freight) — $200M
• Kalshi (regulated event-contract exchange · added to its Series F) — ~$120M
• Unrivaled (3-on-3 women's basketball league) — $106M
• Breedr (digital system of record for cattle) — $27M

What To Watch

• Thursday's open: the Nvidia reaction. A $4B guidance beat with zero China in it, against a chip complex that de-risked on Monday
• Friday: Kevin Warsh at Jackson Hole. Core at 3.3% and a hot headline give the hawks their talking point; falling crude gives the other side theirs
• CPI and the labor prints before September 16 — the FOMC meeting where the hike question actually gets answered
• September 8: Canada's retaliatory tariffs, matching dollar for dollar
• September 9: the first enlarged Treasury buyback operation
• Watch services inflation specifically in the next print. Goods are being fixed by the oil price; services are not

TLDR

• S&P -0.02% to 7,675.70, Nasdaq -0.08%, Dow -0.21% — a holding pattern ahead of Nvidia
• Headline PCE rose 0.2% m/m against a 0.1% forecast, to 3.7% y/y versus 3.6% expected
• Core PCE held at 3.3%, in line but still 1.3pp above target; goods fell 0.1% while services rose 0.3%
• The 10Y ticked up to 4.65%, giving back part of Tuesday's oil-driven drop
• Nvidia guided the October quarter to $108B against $104.2B expected — with no China data center revenue included
• Revenue $81.6B (+85%), Data Center $75.2B, networking +199%; AWS is buying 2 million GPUs
• ANF +36% on a $4.17 vs $1.98 EPS beat; CRM +13% after hours; ZM -6.2% on a two-cent guidance miss

The Bottom Line

The inflation print was the one the hawks wanted and the market ignored it, because everyone knew the session's real number arrived after the close. On PCE: headline came in above forecast at 3.7%, core stuck at 3.3%, and the composition showed goods prices falling while services kept climbing — which means the disinflation that is working is the half crude just handed over, and the half that is stuck is the half the Fed actually controls. Then Nvidia guided $4 billion above consensus and told the market it expects to do it with nothing from China, while Amazon signed up for two million GPUs. Those two facts point in opposite directions for anyone trying to price September. Warsh speaks Friday at Jackson Hole with core at 3.3%, crude down $5 on the week, and the largest company in the market having just raised the bar again. He is not short of material.

_For informational purposes only. Not investment advice._