This surge was apparently fueled by strong earnings reports in the artificial intelligence sector following Nvidia’s quarterly results and hopes that the Federal Reserve may soon cut interest rates. However, late in the week, momentum faded as disappointing tech earnings and renewed caution about economic data weighed on investor sentiment, while sector rotation was evident, with money flows shifting away from mega-cap technology toward more cyclical and value.

The economic calendar is busy this week, with a few key reports that could move markets. On Wednesday, July new home sales will give a fresh look at the housing market, a key gauge of consumer demand.

The S&P 500 dipped slightly to start the week but quickly rebounded after the CPI report came in steady and Fed officials reinforced their independence. Stocks climbed to record highs midweek, only to wobble again after the PPI surprise. Still, by week’s end, positive economic data like relatively strong retail sales and solid manufacturing activity helped keep the overall momentum intact. For the week, the S&P 500 gained nearly 1%.

Several market indicators suggest the odds of a September cut have surged above 90%, with analysts betting softer data will push the Fed toward a 0.25% trim at its next meeting.

he key takeaway from last week is that markets are likely to remain volatile as investors adjust to mixed economic signals, sticky inflation, and uncertain monetary and trade policies. Even minor negative surprises could be enough to spark a pullback with stock valuations at historically exuberant levels. While the long-term outlook remains constructive, expect bumps along the way as new data emerges.