As the echoes of the Fed's hawkish comments fade away, the non-farm payrolls data and Broadcom Inc. (AVGO.US) earnings report are coming in quick succession: U.S. stocks in September face dual validations of interest rate hikes and AI profitability in the "opening week."

As NVIDIA Corporation (NVDA.US) exceeded expectations in its earnings report, rekindling enthusiasm for artificial intelligence (AI) trading and pushing the S&P 500 index closer to historical highs, Federal Reserve Chairman Kevin Walsh's hawkish speech at the Jackson Hole Central Banking Conference quickly shifted the market's focus back to monetary policy risks. Last week, the three major U.S. stock indices collectively posted gains. The S&P 500 index rose 0.49% over the week, now only slightly more than 1% away from its record closing high set on August 13; the Nasdaq index increased by 0.85%, while the Dow Jones Industrial Average climbed 0.53%. The technology sector led the rally, gaining 1.8% for the week, with the communication services sector up 1.6%. Salesforce, Inc. (CRM.US) saw a massive weekly surge of 22% on the heels of better-than-expected earnings and an upgraded guidance. In contrast, the foreign exchange and commodity markets were notably impacted by Walsh's hawkish remarks. The dollar index increased by 0.85% over the week, finishing at 99.69. Gold prices sharply fell by more than 3% on Friday, closing at $4,454.28 per ounce, with a cumulative weekly decline of 3.24%. The prospect of peace in the Middle East has contributed to a drop in oil prices, which has objectively alleviated inflation concerns. According to data from Goldman Sachs Group, Inc., oil flow through the Strait of Hormuz has recovered to about two-thirds of pre-war levels, a significant factor in the recent pressure on oil prices. Although overall market volatility remains low, with the Cboe Global Markets Inc. Volatility Index (VIX) close to its year-low and average daily trading volumes well below 2026 averages, capital flows indicate a rise in cautious sentiment. According to LSEG Lipper data, during the week ending August 26, U.S. equity funds saw net outflows of $22.3 billion, the highest in nearly five months; outflows from large-cap funds totaled $24.73 billion, with almost all the selling pressure concentrated on mega-cap tech stocks as institutional investors seek rotation opportunities in mid- and small-cap stocks. The U.S. bond market also holds hidden risks. Following Walsh's speech, long-term yields did not significantly retreat, partly due to his failure to directly address the historic debt and deficit issues. High yields suggest that pressure in the bond market is unlikely to ease in the short term, which may continue to constrain stock market valuations. As Wall Street enters September, investors will be closely monitoring the U.S. August non-farm payroll report in the coming week for signals about the Fed's next monetary policy direction. This week's U.S. economic data schedule is packed: on Tuesday, the August ISM Manufacturing PMI, July JOLTS job openings, and July construction spending figures will be released; on Wednesday, August ADP private employment data, July factory orders, and the Fed's Beige Book will be published; Thursday will bring July trade balance, initial jobless claims from the previous week, and the August ISM Services PMI; and Friday will feature the most anticipated August non-farm payroll report. Additionally, the recent earnings from semiconductor giant Broadcom Inc. (AVGO.US), the G20 central bank governors' meeting, and the formal leadership change at Apple Inc. (AAPL.US) are also events that could influence market direction. Walsh's hawkish comments at the Jackson Hole conference have raised the likelihood of a rate increase in September to nearly 60%, making investors particularly sensitive to the upcoming economic data releases. Market analysts point out that U.S. stocks are currently at a critical stage where "macro data and AI earnings" are being validated simultaneously. Charles Schwab Corp's most recent market commentary notes that investors are not overly panicked about the prospect of a September rate hike itself but are more vigilant regarding the ripple effects of rate hikes on the global bond market. Historically, September has been the worst month for the S&P 500, which supports a cautious outlook for next week's market. Non-farm Data: The "Touchstone" for a Fed Rate Hike in September The U.S. August non-farm payroll report, set for release this Friday (September 4), is the last heavyweight employment data ahead of the Fed's rate-setting meeting on September 16. Following Walsh's clear expression of concern over inflation and hints at further tightening of monetary policy, this report has been seen by the market as a key determinant of whether a rate hike will occur in September. According to a survey, economists expect the non-farm payrolls to increase by around 58,000 jobs in August, with the unemployment rate remaining at 4.1% and average hourly wages rising by 0.2% month-on-month. ING Groep NV Sponsored ADR economist James Knightly expects the August job numbers may moderate to around 65,000 but believes the trend of "low hiring and low layoffs" will continue. Previously, the July non-farm data unexpectedly decreased by 23,000, raising market concerns about a weakening labor market. The U.S. Bureau of Labor Statistics has also released a preliminary benchmark revision, lowering the total non-farm employment figure for the 12 months ending in March by 79,000 jobs, or approximately 0.1%. Although this revision is much smaller than the 911,000 from the same period in 2025, it serves as a reminder that official employment figures may be systematically overestimated. In his speech last Friday at Jackson Hole, Walsh stated that inflation remains the core challenge facing the Fed, current monetary policy is not significantly restrictive, and he refused to offer forward guidance, advocating for a "quieter" communication style for the Fed. This statement was widely interpreted by the market as a hawkish signal. The Chicago Mercantile Exchange FedWatch tool indicates that the probability of a 25-basis-point hike in September has jumped from 35% before Walsh's remarks to about 57%, with the market fully pricing in at least one rate hike before December. Rick Reed, manager of the Blackrock Debt Strategies Fund Inc., believes that Walsh's speech "correctly leans hawkish," but "definitely does not mean a rate hike is a must in September," as there are still additional employment and inflation data to be released before the meeting. Deutsche Bank Aktiengesellschaft anticipates the Fed will raise rates by a cumulative 50 basis points this year, with hikes in September and December. Bob Schwartz, a senior economist at Oxford Economics, remains more cautious, as he has not included a rate increase in his baseline forecast due to easing core goods inflation pressures and signs of a decline in inflation for non-housing services. For the stock market, the non-farm report does not mean "the stronger, the better." If August's job numbers significantly exceed expectations along with substantial wage growth, it could strengthen expectations for further Fed rate hikes, raising borrowing costs and suppressing stock valuations; if the data is too weak, it could trigger concerns about the economic fundamentals. Matt Stachti, Chief Equity Portfolio Manager at Northwestern Mutual Wealth Management, states that the stock market genuinely hopes for data that keeps the Fed from acting. AI Earnings Relay: Can Broadcom Inc. Replicate NVIDIA Corporations Strong Guidance? Last week, NVIDIA Corporation released quarterly results far exceeding market expectations and, unusually, gave guidance for revenue growth of about 70% for the next fiscal year, reigniting investors' confidence in AI trading. This week, the market is turning its attention to another AI chip giant, Broadcom Inc., which will release its earnings report after the U.S. market closes on Wednesday. The market generally expects Broadcom Inc.'s latest quarterly earnings per share to be $3.24, with revenue around $29.4 billion, reflecting an over 84% year-on-year increase; if achieved, the profit growth would reach 91.5%. In the previous quarter, the companys revenue was $22.19 billion, a 48% year-on-year increase, mainly driven by demand for custom chips and AI network equipment. Investors are particularly focused on whether Broadcom Inc. can provide business visibility similar to NVIDIA Corporation, to demonstrate that the investment boom in AI infrastructure is expanding its beneficiary scope. Mizuho Securities analyst Jordan Klein believes that Broadcom Inc.'s stock price has corrected about 15% over the past two weeks, offering a contrarian buying opportunity. He expects management to provide positive guidance regarding collaboration on custom chips with Alphabet Inc. Class C (GOOGL.US) and AI revenue opportunities for fiscal years 2027 and 2028. However, he also noted that he still prefers NVIDIA Corporation, although Broadcom Inc. may have significant upside potential in the next six months. Besides Broadcom Inc., several other AI-related companies will report earnings this week: Dell Technologies, Inc. Class C (DELL.US) is set to release its earnings report after the market closes on Tuesday, with adjusted earnings per share expected to reach $4.91, more than doubling from the same period last year. Morgan Stanley cautions that market expectations for hardware manufacturers are already high, with Wall Street waiting for Dell Technologies, Inc. Class C to raise its full-year profit forecast based on AI server orders. Meanwhile, Palo Alto Networks (PANW.US) will also report earnings on the same day; on Wednesday, Snowflake (SNOW.US) and Hewlett Packard Enterprise Co. (HPE.US) will follow; and Thursday will see DocuSign (DOCU.US), Victoria's Secret (VSXY.US), Ciena (CIEN.US), and Zscaler (ZS.US) release their results. Overall, the U.S. second-quarter earnings season is nearing its end. According to LSEG IBES data, S&P 500 constituents are expected to see an adjusted earnings growth of 34.5% year-on-year, indicating that companies' core profitability remains strong. Michael Reynolds, Vice President of Investment Strategy at asset management firm Glenmede, stated that if the final batch of earnings reports can sustain this trend, it will provide positive support for the stock market for the remainder of the year. Leadership Change at Apple Inc. and Tesla, Inc. Cybercab: Tech Giants in Focus This week, two notable non-earnings events in the tech sector are drawing attention. Apple Inc. has officially completed the CEO transition, with Tim Cook handing over the reins after many years to John Ternus. Under Cook's leadership, Apple Inc.'s market value grew from around $350 billion to the range of $4 trillion to $5 trillion, the iPhone became an indispensable device in social life, and the services business evolved into a significant revenue source. However, some analysts believe Cook is more of a steady operator than a product innovation genius, as he has not personally introduced new products in recent years. Apple Inc. has also maintained a relatively cautious strategy in the AI era, not blindly chasing the trend of large language models. Cook's transition marks the end of an era for Apple Inc., but the market generally thinks the short-term operational impact on the company will be limited. Tesla, Inc. (TSLA.US) will hold an invite-only launch event for its Cybercab in Austin, Texas, on Thursday. Reports suggest customers may soon book this dedicated self-driving vehicle through Tesla, Inc.'s existing Robotaxi app. The external expectation is that Tesla, Inc. will reveal more details and expansion plans for its autonomous taxi business during the event. G20, Central Bank Decisions, and Global Market Variables Following the Jackson Hole Central Banking Conference, the G20 central bank governors' meeting will take place from Monday to Tuesday in Asheville, North Carolina. This meeting will serve as a key policy communication node. It is reported that Bank of Japan Governor Kazuo Ueda did not attend the Jackson Hole meeting but is expected to participate in this G20 meeting, which could provide important insight into the direction of Japanese monetary policy. In the backdrop of Walsh's hawkish stance and growing divergences in central bank policies, the comments from G20 central bank governors regarding inflation and monetary policy will be critical variables for market fluctuations this week. Another point of interest is that NVIDIA Corporation (NVDA.US) CEO Jensen Huang and OpenAI CEO Sam Altman will speak at the G20 Innovation Ministers' Meeting. Following NVIDIA Corporation's strong earnings, market attention will be focused on whether the remarks from these two tech leaders can inject new catalysts into AI trading. The decline in oil prices is also playing a subtle role. The expectation of peace in the Middle East has pushed oil prices lower, which has objectively eased inflation concerns and calmed worries about the Fed's rate path. If the situation heats up again, this buffer will disappear, and the intensity of policy debates will increase accordingly. Whether the G20 can issue collaborative signals on inflation management, as well as the prospects for a ceasefire between Iran and the U.S. and negotiations for navigation through the Strait of Hormuz, will determine the next direction of risk assets and safe-haven assets. Additionally, the global central bank agenda is also relatively dense this week. The Reserve Bank of New Zealand will announce its interest rate decision on Wednesday, with ING Groep NV Sponsored ADR group and Nomura both expecting a 25-basis-point hike to 2.75%, due to the rise in New Zealand's second-quarter inflation to its highest level in two and a half years. The Bank of Canada will also announce its decision on the same day, with the market widely expecting to maintain rates at 2.25%, as Canada's second-quarter annualized GDP grew by 3.3%, the strongest in over three years, and the labor market remains resilient. In the Eurozone, preliminary CPI data for August is expected to show a rise in the overall inflation rate to 3.0%, with core inflation increasing to 2.6%. If realized, this would be the highest since 2023. Goldman Sachs Group, Inc. predicts a year-on-year rise of 14.4% for energy components. The European Central Bank will hold a meeting on September 10, and whether inflation data can support its rate hike expectations will have a critical impact on the short-term trend of the euro.