Hey there! Happy Monday from The Street Sheet. Ready to start a new week of trading off strong? Here’s everything you might have missed last week on Wall Street, and everything to watch in the week ahead.

The S&P 500 broke a five-day streak of losses on Friday, rallying on Federal Reserve Chair Jerome Powell’s remarks at the Jackson Hole symposium, which marked a dovish turn and opened the door to a September interest rate cut.

Markets loved the Fed Chair’s change in tune. All three major indices surged over 1.5% for the day, and by week’s end, investors were pricing in a nearly 90% chance of a rate cut at the Fed’s September 17 meeting. For the week, the Dow Jones rose 1.52%, while the S&P 500 gained 0.27%. The Nasdaq fell by 0.58%, weighed down by lingering tech weakness.

A sharp sell-off in stocks like Palantir $PLTR ( ▲ 2.35% ) wasn’t the only warning sign. Weekly jobless claims data released the same day showed unemployment claims for the week of August 16 rising by 11,000 to their highest level in two months.

Further pointing to economic weakness, the Philadelphia Federal Reserve survey reported cratering manufacturing activity. The survey showed the manufacturing business outlook in the Northeastern hub falling to -0.3, down sharply from the 15.9 reading in July and well below economists’ expectations.

On the consumer sentiment front, the National Association for Homebuilders reported homebuilder sentiment falling to its lowest level since December 2022. The numbers suggest that potential homebuyers are waiting for mortgage rates to drop, and increasingly feel too economically insecure to buy a new home in the near future.

One more attention-grabbing statistic: analysts at Renaissance Macro Research found that corporate spending on AI infrastructure is driving the lion’s share of US GDP growth. The findings suggest that the AI boom may have prevented, or at least delayed, a recession.

If the boost from AI spending proves unsustainable, it could potentially cause economic growth to sputter and alter the Fed’s calculus. We’ll be watching a slew of reports scheduled next week for more insights on that question.

The release of the Fed’s minutes from its July meeting showed that a majority of participants viewed persistent inflation as a greater threat than labor market weakness. The coming week will bring clarity on whether this is really the case — or greater leeway for the Fed to cut rates as traders expect.

Monday will bring July’s numbers on new home sales. After June’s report showed new home sales down 6.6% year-over-year, we’ll be watching to see if the slowdown persisted into July. The next day, the Case-Shiller 20-city index will be released. Last month’s reading showed an annual 2.8% climb in home prices, which was actually a slowdown in pricing momentum. We’ll see if this slowdown continues.

Slowing new home sales and falling home prices would indicate a cooling economy, and give talking points to the doves ahead of the Fed’s September 17 meeting. So too would slipping consumer confidence for the month of August, which would be reflected in new numbers scheduled for Tuesday.

Wednesday, August 27, is a quiet day for economic data, with no major government numbers scheduled for release. But it won’t be a quiet day on Wall Street, with Nvidia $NVDA ( ▲ 1.09% ) scheduled to report earnings. Nvidia is widely seen as the most important stock on Wall Street, not just for its status as the world’s largest publicly traded company, but also for its bellwether status for the global AI revolution that has powered markets since late 2022.

Analysts forecast 48% growth for Nvidia, which grew revenues by 69% year-over-year last quarter. A surprise earnings miss could shake markets if traders take it as a sign that the AI-induced economic activity is cooling. On the other hand, Nvidia has beaten analysts’ estimates for each of the last four quarters. Another beat could send markets higher.

Thursday brings weekly initial jobless claims numbers, which will shed light on whether last week’s rising claims, the highest since November 2021, are part of a troubling trend. Also coming Thursday are first-revision GDP numbers, which will tell us whether the US economy is still in the neighborhood of the robust 3% growth reported for Q2 in July.

Finally, Friday brings a bounty of inflation data. The Personal Consumption Expenditures index will be released, as well as the Core PCE index. With last month’s core PCE index showing 2.8% year-over-year price increases in June, we’ll see in what direction July’s numbers go. A reading that’s above last month’s 2.8% might dampen hopes of a September rate cut, considering how conflicted Federal officials seem about the choice facing them on September 17.