The biggest event in the market is always the next one! This week, two blockbuster data will jointly test the market

Last week, U.S. stocks rebounded from a three-week losing streak. Although Nvidia's earnings release and Federal Reserve Chairperson Powell's speech in Jackson Hole brought some volatility to the market, the artificial intelligence boom offset the adverse impact of rising bond yields.

Johan Grahn, chief ETF market strategist at Allianz Investment Management, said: "Powell is in a position where he's trying to get to the top of a mountain, but he's not going to do it all at once."

"Powell needs these data clouds to give him a signal that the work is done and I don't believe he will know that before September."

Ahead of Mr. Powell's speech, Nvidia released earnings that beat Wall Street's expectations. However, analysts said both events were largely expected and Wall Street's response was muted.

This week, the Fed's preferred measure of inflation -The July personal consumption expenditure index (PCE) and the latest monthly employment report will pose another test for the stock market.With the economic outlook uncertain, investors will be assessing whether stocks can hold on to their recent gains.

This week's two blockbuster data: PCE and non-agricultural

The biggest market event is always the next one.

As the second quarter earnings season draws to a close,Key economic data in the coming days will provide some guidance on the resilience of the U.S. economy and whether the Federal Reserve will raise interest rates further at its September meeting.

Anthony Saglimbene, chief market strategist at Ameriprise Financial, said:

"There's not a lot of corporate news that can really move the market, which means traders and investors will focus on the macro factors."

US PCE inflation data for July will be released on Thursday. PCE is forecast to recover to 3.3% year-on-year from 3% last month, while it will rise modestly by 0.2% month-on-month. Core PCE will also rise slightly to 4.2% from 4.1% in June.

In a speech at Jackson Hole, Mr. Powell pointed to core PCE as his main focus. "The low monthly readings for core inflation in June and July are encouraging, but the two months of good data are just the beginning, giving us confidence that inflation is heading for a sustained decline towards target," Mr. Powell said.

The Labor Department's non-farm payrolls report for August will be released on Friday. Economists surveyed by Dow Jones expect the economy to add 175,000 jobs in August, and the unemployment rate is expected to remain at 3.5 percent. The Federal Reserve forecast in June that the unemployment rate would climb to 4.1 percent by the end of 2023, according to a summary of quarterly economic forecasts.

In a telephone interview on Friday, Mr. Saglinbein said investors needed an "ideal economic scenario" of slower growth but not a recession to get the Fed closer to ending interest rate increases.

"Any economic data that exceeds expectations, such as the better-than-expected PCE inflation and employment reports, could be viewed as bearish by the market."

Glann said,While July's PCE report will be "pivotal" for September's policy meeting, the data will have to deviate significantly from expectations before policymakers "take another step up the mountain."

Bullish sentiment on U.S. stocks has declined

However, recent strong economic data has led to fears that the Federal Reserve will maintain its benchmark lending rate higher for longer than expected, triggering a jump in longer-term Treasury yields, with the 10-year yield rising to its highest level since November 2007 on Monday, according to Dow Jones market data.

From a historical perspective,August was not the best month for US stocks.By August 2023, the S & P 500 and Nasdaq Composite Index had risen for five consecutive months, soInvestors have a "reason" to take profits on big tech companies with "fat valuations".

weeklyIndustrial foreign exchangeThe investor sentiment survey revealed that in the seven days ended last Wednesday,Bullish sentiment has declined, falling below average for the second consecutive week.In the most recent survey, only 32.3% of respondents were bullish on the stock market, below the historical average of 37.5%.

Historical data shows that,September may not be much better than August, as September has historically been the weakest month for U.S. stocks.Dow Jones market data shows that since 1928 and 1896, the S & P 500 and Dow Jones Industrial Average have each lost an average of 1.1% in September.

In addition, Saglinbin said there are still concerns that the Federal Reserve will raise interest rates again, and that the economy could slow faster than expected, ultimately leading to a recession in 2024.

"I don't think traders are ready to go in and buy based on these declines, but I think if there is more pressure in September and the macro environment remains strong, then more investors will come in and start buying, and later in the year, when seasonal trends improve, that could be more supportive for stocks."