Tuesday was a waiting game on Wall Street. Major indexes drifted most of the session before a late push lifted the S&P 500 and Nasdaq to the day’s highs, though volumes stayed thin with investors holding back ahead of NVIDIA’s blockbuster earnings tomorrow. Industrials, Health Care, and Tech led, while Consumer Staples and Energy lagged. Small caps once again outperformed, suggesting the rally may be broadening beyond just the mega-cap names.

Macro catalysts loom large. Durable goods orders surprised on the upside, a sign that business investment remains resilient despite trade-policy fog, while housing data painted a weaker picture with prices slipping across multiple measures. Consumer confidence ticked lower, underlining that households are uneasy about tariffs, labor, and inflation. Treasuries found support at the short end thanks to a strong 2-year auction, but the curve steepened as 30-year yields pushed higher. The dollar slipped following Trump’s shock announcement that he’s firing Fed Governor Lisa Cook, a move that is already being challenged in the courts.

The setup: NVDA earnings Wednesday night, GDP data Thursday, and PCE inflation Friday morning. Taken together, the next 72 hours could reshape the tone of markets heading into September.

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Traders are bracing for NVIDIA. The stock has become a single-stock macro event, with its $4.2 trillion market cap now representing about 8% of the S&P 500. Analysts expect earnings of $1.01 a share, nearly 50% higher than a year ago, but it’s the guidance that matters, particularly on AI chip demand and margins. Options markets are pricing the potential for the stock to swing as much as 8% after results, which could ripple across indexes.

Meanwhile, the so-called “smart money” has joined retail in plowing back into equities. Data show hedge funds and institutions chasing momentum even as valuations stretch. Buybacks have also surged past $1 trillion at the fastest pace on record, a powerful technical tailwind that helps explain why markets remain so resilient despite policy noise and geopolitical risk. Still, some strategists warn that concentration in the Mag 7 remains a double-edged sword: strong on the way up, dangerous if the narrative cracks.

Geopolitics remain unsettled. In Europe, France is once again the “sick man” of the eurozone, battling sluggish growth and rising political pressures that threaten broader EU stability. Across the Atlantic, violence tied to drug cartels in Ecuador is spilling into political and economic life, a reminder of fragile state structures in parts of Latin America.

The bigger global chessboard, however, still revolves around Russia and China. Trump warned of “economic war” if Putin drags his feet on peace negotiations, underscoring the high stakes of the next round of talks. Meanwhile, Xi Jinping has launched a sweeping purge of China’s military establishment, signaling tightening control at home even as Beijing prepares for renewed trade negotiations with Washington. All of this comes as investors wonder how long markets can keep shrugging off geopolitical tremors that, in past cycles, would have rattled risk assets far more.

President Trump’s move to fire Fed Governor Lisa Cook has shaken Washington and Wall Street alike. While he argues the dismissal stems from alleged misconduct, Cook plans to contest it in court, setting up a constitutional test of presidential power over the central bank. Legal scholars point to Supreme Court precedent limiting such removals, but the outcome is unclear. If Trump prevails, he gains the chance to reshape the Fed board in his own image, potentially tilting policy toward more aggressive rate cuts.

The implications for Fed independence are profound. Powell, fresh off a carefully balanced Jackson Hole speech, now faces questions about whether monetary policy decisions are being politicized. Markets have so far taken the view that lower rates may come faster, boosting equities in the near term. But bond markets are flashing warnings: the yield curve is steepening, suggesting investors fear that political interference could ultimately mean higher inflation and borrowing costs down the line.

The calm before the storm. Tuesday offered little in the way of fireworks, but the stage is set: NVIDIA’s earnings, GDP, and PCE data will deliver clarity (or fresh confusion) on the twin narratives of AI-fueled optimism and Fed-driven uncertainty. Throw in Trump’s escalating battle with the central bank, and the balance of risk is unusually delicate. One big surprise could be all it takes to flip the script as summer trading winds down.