Nuveen's Saira Malik: Markets are cautious ahead of Nvidia earnings, PCE data, Fed news

Market Overview & Fed Policy - Markets are cautiously awaiting Nvidia earnings and PCE inflation data [2][3] - Equities are showing a neutral response to Fed actions, with focus on inflation, earnings, and employment [3][4] - The dollar is slightly weaker, while the yield curve is expected to steepen [4] - A 25 basis points rate cut by the Fed is expected in September, contingent on August payrolls [10] - Disappointing August payrolls could put a 50 basis points rate cut back on the table [10] Nvidia & Tech Sector - Nvidia is considered underowned by investors [6] - Nvidia's potential earnings could reach $8 per share by 2027, trading at 25-30 times 2026 earnings [6] - Continued bullishness around AI demand is crucial for Nvidia's stock performance [6][7] - Tech stocks comprise over 30% of the S&P 500's market cap and have driven two-thirds of recent earnings growth [8] - Strong Nvidia earnings are expected to continue leading the US market [8] Fixed Income & Economic Outlook - The Treasury yield curve is expected to steepen, with longer rates potentially rising [9] - If the yield curve steepens due to a strong economy, it's considered positive for equities [10] - Structurally higher inflation could also contribute to the steepening yield curve [10] - If the Fed waits to cut rates until employment markets crack, the risk of recession increases [10]