Wall Street traded cautiously on Thursday as investors weighed strong economic data, a high-profile legal clash between President Trump and Federal Reserve governor Lisa Cook, and earnings from Nvidia, a bellwether for the AI-fueled rally. The Nasdaq Composite rose 0.3%, while the S&P 500 hovered near flat and the Dow Jones Industrial Average slipped 0.2%.
Nvidia’s Earnings in Focus
Nvidia shares dropped 1.5% in early trading after an initial 4% decline on Wednesday despite beating earnings estimates. Weakness in data center sales overshadowed strong overall results, raising questions about whether AI momentum can continue at its current pace. CEO Jensen Huang emphasized “extraordinary” demand for Blackwell GPUs and said the company is preparing to expand sales in China’s $50 billion AI market, though geopolitical risks remain.
Economic Data Shows Strength
New government figures showed U.S. GDP grew 3.3% in the second quarter, a rebound from the 0.5% contraction in Q1. The improvement was largely attributed to a decline in imports following a tariff-driven surge earlier in the year. Weekly jobless claims also fell, underscoring a resilient labor market with layoffs remaining low. Attention now turns to Friday’s release of the July PCE inflation reading, a critical indicator for Federal Reserve policy decisions.
Federal Reserve Independence Tested
Markets were unsettled by news that Fed governor Lisa Cook filed a lawsuit against President Trump after rejecting his termination order. Trump attempted to remove Cook, alleging mortgage fraud, marking an unprecedented challenge to central bank independence. The outcome of the dispute could set a significant precedent for the relationship between the executive branch and the Federal Reserve.
Other Corporate Earnings
Beyond Nvidia, earnings updates shaped market sentiment. Snowflake surged after reporting strong results linked to AI investments, suggesting that corporate adoption of advanced analytics remains robust. HP shares fluctuated as investors assessed its ability to withstand the financial impact of new tariffs, eventually stabilizing later in the session.
Conclusion
With Nvidia’s earnings, strong GDP growth, and legal turmoil surrounding the Federal Reserve dominating headlines, investors balanced optimism about the economy against lingering uncertainties. Friday’s PCE inflation report is expected to be the next major catalyst for market direction heading into September.
