Investing.com – U.S. stock index futures fell in evening trading on Sunday, cooling after a rally on Wall Street after comments from Federal Reserve officials supported expectations for a September interest rate cut.

But this week there were a number of important signals to be cautious about. The most important was earnings from stock market darling NVIDIA Corporation (NASDAQ:), which will be released after the market closes on Wednesday. Later in the week, data on the Fed’s preferred inflation indicator is also expected.

fell 0.2% to 5,643.50 points, while by 19:45 ET (23:45 GMT) it was down 0.2% to 19,745.0 points. fell slightly to 41,251.0 points.

Nvidia earnings on track as AI rally stalls

On Wednesday, Nvidia will announce its results for the three months to July, focusing on whether the company was able to maintain its rapid profit growth thanks to artificial intelligence.

The chipmaker’s earnings and outlook will also provide further clues about the state of AI demand and come after a series of mixed earnings from other technology heavyweights raised questions about how much of the AI-driven market rally last year was justified. Major companies such as Alphabet Inc (NASDAQ:) and Microsoft Corporation (NASDAQ:) had fallen following their second-quarter earnings reports.

Nvidia, the maker of the most advanced AI chips on the market, benefited significantly from the increased interest in AI. The company more than doubled its value last year and became one of the most valuable companies on Wall Street.

But this trend will be put to the test on Wednesday. Earnings figures released in July by other chipmakers such as TSMC (NYSE:) and ASML (NASDAQ:) showed that at least the chipmakers still seem to be benefiting from the demand for AI.

PCE inflation on the rise as speculation grows about September rate cuts

The focus this week will also be on the data on the Fed’s preferred inflation indicator. The release is expected on Friday and should provide further clues on the direction of interest rates.

Comments from Fed Chairman Jerome Powell on Friday supported expectations for a rate cut in September, but showed traders were divided on whether the cut should be 25 or 50 basis points.

The PCE inflation index will likely factor into bets on the size of the interest rate cut in September.

Dow and S&P 500 approach record highs

Optimism about interest rate cuts pushed Wall Street indices close to record highs on Friday.

The price rose by 1.2% to 5,634.61 points, while the rose by 1.1% to 41,175.08 points. The price rose by 1.5% to 17,877.79 points.

But while the Dow and S&P 500 are hitting recent highs, the Nasdaq is still trading well below its record high set earlier this year as a mix of profit-taking and questions about the AI ​​rally weighed on technology stocks in July.

Due to the expected interest rate cuts, traders also sold technology stocks and focused on more economically sensitive, value-oriented sectors.