The financial markets experienced a turbulent week as economic indicators pointed to slower growth and persistent inflation concerns. The S&P 500 (^GSPC) closed the week down by approximately 1.7%, following an all-time high on Wednesday. The Nasdaq Composite (^IXIC) also faced setbacks, dropping about 2%, while the Dow Jones Industrial Average (^DJI) led losses with a nearly 3% decline. Key factors contributing to this downturn included Walmart's (WMT) disappointing outlook and ongoing inflation worries. Investors are now looking ahead to significant earnings reports from companies like Nvidia (NVDA), Home Depot (HD), Lowe’s (LOW), and Salesforce (CRM), as well as crucial economic data releases, including the core Personal Consumption Expenditures (PCE) index.

The upcoming week is expected to be pivotal for market sentiment. Investors will closely monitor Nvidia's quarterly results, which are set to be released after the market close on Wednesday. Analysts anticipate that Nvidia will report adjusted earnings per share of $0.84, representing a 63% increase from the previous year. Revenue projections stand at $38.26 billion, up 73% from the same quarter last year. Market participants are particularly interested in CEO Jensen Huang's comments on AI chip demand and potential competition from emerging players like China's DeepSeek. Additionally, Nvidia's performance could provide insights into the broader tech sector's health, especially as most of the "Magnificent Seven" tech stocks have lagged behind the S&P 500 so far this year.

In the economic arena, the release of the core PCE index on Friday will be a key event. This measure, preferred by the Federal Reserve, is projected to show an annual increase of 2.6% in January, down from 2.7% in December. Economists expect the month-over-month core PCE to rise by 0.3%, compared to 0.2% in the previous month. These figures will offer valuable information on inflation trends and may influence the Fed's interest rate decisions. Morgan Stanley's chief U.S. economist, Michael Gapen, noted that a 2.6% increase in core PCE would suggest a meaningful slowdown in the 12-month pace of core inflation, potentially leading to a quarter-percentage-point rate cut in June.

Consumer sentiment has also taken a hit, with the University of Michigan's survey hitting its lowest level since November 2023. The S&P Global flash US composite PMI tumbled to its lowest point in 17 months, reflecting heightened uncertainty and rising prices. Chris Williamson, S&P Global Market Intelligence's chief economist, highlighted that business optimism has swung to one of the gloomiest levels since the pandemic, citing concerns over federal government policies, tariffs, and geopolitical developments. Despite these challenges, some analysts remain cautiously optimistic about the market's long-term prospects. Citi's US equity strategist, Scott Chronert, believes there is still upside potential for the S&P 500 by year-end, although the path forward may be marked by increased volatility and pullbacks.

As the week progresses, investors will be watching a series of economic reports and earnings announcements for further clues on the economy's direction. Key data points include the fourth-quarter GDP second revision, initial jobless claims, and durable goods orders. Companies like American Tower (AMT), AMC Entertainment (AMC), and First Solar (FSLR) will also report their earnings, providing additional insight into various sectors' performance. The combination of economic data and corporate results will likely shape market sentiment and investor confidence in the coming days.