Weekly Market Sparks 9/02/25

Rusty Vanneman

— 2 min read

Talking Points for The Week That Was and The Week Ahead

Executive Summary Sparks

  • Last Week: Nvidia earnings dominated headlines, with solid results but muted stock reaction, reminding investors that expectations may be getting ahead of reality. Core PCE inflation rose at the fastest pace since February, while GDP was revised higher to +3.3%.
  • The Week Ahead: Key releases include PMIs, JOLTS, the Trade Balance, and the August jobs report—crucial inputs ahead of the September FOMC meeting.
  • Market Wisdom: At record highs and stretched valuations, now is the time to lean harder into diversification.

Sparks from the Week That Was

  • Market Performance: U.S. equity indexes ended slightly lower on light holiday trading. The Dow hit a record midweek before retreating. Small caps outperformed large caps for the third straight week, and the equal-weight S&P 500 reached new highs—signaling broader participation beyond the mega-caps.
  • Economic Data:
    • Inflation: Core PCE rose +0.3% M/M and +2.9% Y/Y, the strongest since February, raising the bar for Fed rate cuts.
    • Growth: Q2 GDP was revised up to +3.3%, the fastest since Q3 2023. Final Sales jumped to +6.8%, the best since 2021.
    • Spending & Income: Consumer spending (+0.5% M/M) and incomes (+0.4% M/M) both accelerated, highlighting the resilience of the U.S. consumer.
    • Durables: Orders fell -2.8% in July, but core capital goods rose +1.1%—a positive sign for business investment.
    • Housing: Home prices continued to soften, with Case-Shiller and FHFA indices showing the slowest growth in years.
  • Nvidia & AI Sparks:
    Nvidia reported a 56% revenue jump, cementing its role as the face of AI enthusiasm. Yet despite blowout numbers, its stock slipped. Why? Lofty expectations. Its data center sales slightly missed, and guidance wasn’t as aggressive as past quarters. With a $4.2 trillion market cap—larger than entire European stock markets or the S&P energy sector—Nvidia’s weight is extraordinary. AI infrastructure demand is undeniably massive, but markets may be discounting decades of perfect growth ahead. As Rob Arnott put it, bubbles don’t burst because the story is wrong, but because the assumptions around timing and magnitude are unrealistic.
  • Sentiment & Credit: Investor sentiment remains bullish, with credit spreads at levels implying near-perfect economic conditions. This optimism leaves little margin for error if growth slows or inflation lingers.

Sparks for the Week Ahead

  • Economic Data: PMI surveys, JOLTS (Weds), Trade Balance (Thurs), and August Nonfarm Payrolls (Fri).
  • Fed & Policy: Markets are pricing in an 87% chance of a September 25bps cut. Powell and Fed officials will remain in focus.
  • Markets & Earnings: Nvidia’s report is behind us, but AI expectations remain front and center. Watch for signs of sector rotation into cyclicals and value.

Sparks of Market Wisdom

When a single company—like Nvidia—accounts for such an outsized share of market gains, it’s a signal for caution. Concentration and stretched valuations make diversification more—not less—important. Staying invested is key, but history reminds us that discipline and diversification are what carry investors through cycles, especially when optimism runs high.

Quote of the Week

“And now that you don’t have to be perfect, you can be good.” — John Steinbeck

Invest Well, Be Well.
Rusty Vanneman | rustysbridge.com
Listen to my new podcast: Invest Well, Be Well https://podcasts.apple.com/us/podcast/invest-well-be-well/id1827014645

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