NVDA Delivers, Warsh Goes Hawkish: Rate-Hike Odds Jump to 57%

It was a week where NVIDIA did its job, Salesforce reminded the market software isn’t dead, and new Fed Chair Warsh used his first Jackson Hole keynote to tell markets the central bank’s “predominant focus right now should be on prices.” The result: a small up week for the S&P 500 and Nasdaq, a stronger dollar, a weaker gold price, and rate-hike odds for September nearly doubling in the space of a week. Underneath the calm headline tape, retail kept cracking and gold miners got hit hard. Here’s the recap, and what’s on deck heading into the long Labor Day weekend.

Macro Catalysts: A Hawkish Fed Chair Meets a Beat-and-Raise NVDA

Three things drove the tape this week: NVIDIA’s print, Salesforce’s print, and Jerome Warsh’s Jackson Hole debut.

NVDA beat expectations and, more importantly, laid out a path to roughly 70% revenue growth in 2027 alongside better-than-feared margins, evidence the company is successfully using its pricing power to work through supply-chain bottlenecks rather than get squeezed by them. Just as notable: Salesforce also delivered a strong quarter and announced a formal partnership with a major AI model provider to build an AI-enhanced software platform. CRM shares are still down for the year, but the print was read as a signal that legacy software isn’t dead, it’s adapting.

Software up almost 50% from April lows.

The bigger surprise came from the Fed. At his first Jackson Hole address as Chair, Kevin Warsh delivered a notably hawkish message, reiterating the Fed’s commitment to its 2% inflation target and signaling that price stability, not growth support, is the priority right now. That shift landed hard on rate expectations: odds of a 25bp hike at the September meeting jumped from 40% to 57% over the course of the week, and futures pricing now shows a gradual climb in the implied path through 2027 rather than the cuts markets had been leaning toward. The 10-year/2-year spread ticked to 0.38% after Warsh specifically flagged the Fed’s ability to influence the short end of the curve.

Behind the scenes, the same fiscal and debt dynamics from recent weeks haven’t gone away, GS’s macro team noted the federal deficit has now eclipsed $40 trillion, and that Treasury’s recent buyback expansion doesn’t really address the underlying drivers of higher long-end yields: mounting fiscal pressure, a surge in corporate credit issuance to fund AI buildouts, and continued oil price volatility. On that last point, the Strait of Hormuz is nearing six full months of closure, though shippers and producers have adapted better than expected and more Gulf oil is making it to market than initially feared.

Asset & Sector Performance: Dollar Up, Gold Down, Retail Keeps Cracking

Broad indices finished the week modestly higher, the S&P 500 and Nasdaq both small up, while the dollar strengthened and gold pulled back, a reversal of the “debasement trade” dynamic that dominated the tape a few weeks ago.

At the sector level, Energy remains the runaway YTD leader, but this week was a different story: Financials and Telecom led on the week while Health Care was the standout laggard, down roughly 2% as Pharma and Health Care Equipment names sold off hard. Real Estate and Utilities also stayed weak, still feeling the pressure of higher yields. At the industry level, Gold Miners were among the worst performers of the week, no surprise given bullion’s pullback, alongside Aerospace & Defense and Pharmaceuticals, while Cyber Security, Internet, Financials, and Software led the winners’ column.

Retail kept showing cracks. DKS shares lost roughly a quarter of their value this week, compounding last week’s roughly 10% drawdowns in WMT and TJX, three retail stalwarts now flashing warning signs even as analysts largely remain constructive on all three names longer-term. The read-through: consumer spending is expected to slow further into the second half of the year as income growth cools and savings rates sit near record lows.

DKS weekly chart.

Rates & Fed Expectations: Hikes, Not Cuts, Back on the Table

Global sovereign yields were mixed to modestly higher on the week, with the U.S. 10-year easing just slightly to 4.72% (-2bps WTD) even as the broader path of Fed expectations shifted hawkish:

The bigger move was in Fed funds futures. The effective rate sits at 3.63% against a 3.75% target, but the implied path now points steadily higher through 2027 rather than lower, a direct reaction to Warsh’s inflation-focused Jackson Hole tone. As noted above, September hike odds nearly doubled on the week to 57%.

Volatility & Technicals

The VIX closed the week at a subdued 14.43%, well below its recent spikes and consistent with a market that, on the surface, took a hawkish Fed and a mixed retail earnings season mostly in stride. S&P futures spent the last five sessions consolidating in the mid-7,700s after a sharp move higher earlier in the week, holding just below recent highs into the long weekend.

Seasonality is worth flagging here too: both the S&P 500 and Nasdaq 100 have historically weak September track records, and positioning into next week should reflect that.

Earnings Checkpoint: A Loaded Post-NVDA Week

With NVDA and CRM now in the rearview, next week’s earnings calendar stays busy

The SPY weekly straddle is currently pricing an implied move of roughly +/- 1.1% into next Friday.

The Week Ahead: Payrolls, ISM, and a Fed Blackout

The calendar is front-loaded ahead of a shortened Labour Day week:

• Mon 31-Aug: Dallas Fed Manufacturing Activity; end-of-month rebalancing
• Tue 1-Sep: Manufacturing PMIs; ISM Manufacturing; JOLTS
• Wed 2-Sep: ADP Employment; Factory Orders; Durable Goods
• Thu 3-Sep: Weekly Claims; Services PMIs; ISM Services
• Fri 4-Sep: Nonfarm Payrolls; Unemployment Rate; Labour Force Participation Rate

Fed speakers are active into the blackout period: Barr speaks on the economic outlook, the Fed releases its Beige Book, and both Waller and Hammack are scheduled to appear, before the Fed’s external communications blackout kicks in from September 5th through the 17th ahead of the next policy meeting.

Trader’s Note: A hawkish Fed Chair and a beat-and-raise NVDA pulling the market in opposite directions is exactly the kind of setup that keeps realized vol low right up until Payrolls Friday breaks the tie. With September’s seasonal track record working against the bulls and hike odds now above a coin flip, staying nimble into month-end and the jobs report feels like the right call.

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