Nvidia earnings tonight, and the market is pricing 32% odds of a September hike

The three major indices barely moved. The S&P 500 closed at 7,675.70, down 0.02%; the Nasdaq at 26,130.20, down 0.08%; the Dow at 53,463.88, down 0.21%. The VIX slipped further to 15.21, down 1.55%. The closing numbers themselves say little, but they’re sitting on top of two things that matter: July PCE came in at 3.7% year-over-year (per Fox Business), and Nvidia’s earnings won’t land until after the close.

Start with inflation. At 3.7%, we’re nearly double the Fed’s 2% target, and multiple outlets flagged that line. The market’s reaction, in Bloomberg’s framing, was that “stock futures held steady after a mild uptick in the inflation gauge” — meaning the month-over-month print didn’t spook anyone, and the absolute level on a year-over-year basis got shelved for now. The 10-year Treasury sits at 4.66%, and the dollar index is at 99.12, up 0.20% — both postures of knowing but not moving. One detail easy to miss: the Bureau of Economic Analysis is about to switch to a new methodology for revising core PCE, which means the benchmark number everyone’s been arguing over could itself shift in the coming months.

What’s actually pricing this in real time is the prediction market. On Polymarket, the odds sit at 66% for the Fed holding steady at the September meeting, 32% for a 25bp hike, just 1% for a 25bp cut, and 0% for a hike above 50bp. A meeting where rate-cut odds have shrunk to single digits and hike odds sit near a third is a fundamentally different pricing environment — and a VIX parked at 15.21 suggests equities haven’t really paid for that third yet. Bonds and prediction markets are queuing up for one scenario; stocks are sleeping through the other. Only one of them can be right.

Politics is adding fuel to the same fire. Fed Governor Lisa Cook responded to Trump’s renewed push to remove her from the board, saying she’d done nothing improper and vowing to fight back. When a sitting president is renewing an attempt to remove a sitting Fed governor at the same time traders are pricing 32% odds of a hike, the uncertainty around the rate path isn’t coming from the data alone — it’s also coming from whether the institution making the decision can hold together.

Under the hood, the sectors told a more interesting story than the indices. Industrials (XLI) led with a 1.09% gain, Energy (XLE) rose 0.60%, and Tech (XLK) added 0.61%. Healthcare (XLV) brought up the rear, down 1.00%, dragged by Eli Lilly, which fell 3.18% to $1,194.40 — the ugliest name on the S&P’s loser board for the day. Consumer Discretionary (XLY) fell 0.67% and Real Estate (XLRE) dropped 0.60%. The index-level calm was really a bunch of opposing pulls canceling each other out — not everyone stood still.

Earnings were the real dividing line of the day. Nvidia closed at $209.66, down 1.59%, then jumped 4% in after-hours trading once results landed (per CNBC): Q2 revenue of $96.2 billion, with $89.0 billion of that from data centers. Bloomberg’s headline framing was that Nasdaq futures and AI stocks broadly would follow its guidance higher — meaning this isn’t just Nvidia’s story, it’s tomorrow’s opening price for the entire AI supply chain. CrowdStrike rose 2.05% to $189.18 on Q2 revenue of $1.47 billion, up 26% year-over-year. Salesforce was roughly flat at $205.62, with adjusted EPS of $5.90.

Following that thread into fund flows: ARK added 7.8% to its Cerebras position in ARKK and 9.8% in ARKW on the same day, while cutting its Roblox stake in ARKK by 37.4%, leaving that position at just 0.01%. It’s a classic move — clear out the fringe positions and lean a little harder into compute chips.

Two overseas items worth noting. Saskatchewan imposed a 50% tariff on U.S. alcohol after Trump added new tariffs on Canadian goods (per Reuters) — a provincial-level retaliation that’s small in scale but clear in direction, a sign that trade friction is trickling down from the national level. KKR paid $250 million to settle a Justice Department lawsuit over its merger filings, with the Financials sector (XLF) edging down 0.09%. The real cost of settlements like this isn’t the fine itself — it’s that every deal filing from here on will require more compliance time. Meanwhile, the BBC suggested Meta’s $18 billion settlement could accelerate a broader reckoning over child safety on social platforms; if that number becomes a template, social companies’ spending structure shifts from a one-time payout to a recurring line item.

On oil, WTI closed at $81.84, down 0.63%. Trump claimed the U.S. Navy has cleared all mines from the Strait of Hormuz, but on Polymarket, “normal transit through the Strait resumes by September 30” is priced at just 8%, “normal transit resumes by year-end” at 34%, and “U.S. declares the Iran blockade over by August 31” at only 5%. The gap between the official line and what people betting real money are pricing suggests traders think there’s more than a procedural step between clearing mines and restoring commercial transit.

Three things to watch next. Whether Nvidia’s after-hours 4% gain holds at tomorrow’s open — if it doesn’t, the market bought the numbers, not the guidance. Whether September hike odds on Polymarket climb from 32% toward 50% while the VIX stays parked at 15 — that would be a signal that equity pricing needs to be redone from scratch. And whether that 8% odds on Hormuz normalization starts climbing — oil and shipping rates would move first, and only then would today’s 0.60% gain in Energy earn a real sequel.