Wall Street Catches Its Breath Ahead of Big Week for Fed and Retail Earnings

Stocks barely budged on Monday as Wall Street hit the pause button after a string of recent gains. The Dow Jones Industrial Average inched up just 4 points — basically flat — while the S&P 500 and Nasdaq hovered right around the same spot they started.

The quiet open comes after two straight winning weeks and ahead of what could be a game-changing few days. Investors are waiting on a pile of retail earnings, fresh economic data, and a highly anticipated speech from Federal Reserve Chair Jerome Powell at the central bank’s annual Jackson Hole summit.

This week is all about America’s shoppers. Big-box giants Home Depot, Lowe’s, Walmart, and Target will all drop earnings reports, giving markets fresh insight into whether consumers are still willing to spend despite sticky inflation and higher borrowing costs.

“Retailer earnings reports this week are likely to reflect tariff concerns, inflation uptick and an anticipated economic slowdown,” said Scott Wren, senior global market strategist at Wells Fargo.

He warned the recent equity rally could lose steam if consumers start showing more weakness.

Beyond earnings, all eyes are on Jackson Hole, Wyoming. Powell’s Friday speech is expected to set the tone for what comes next in interest-rate policy. Markets are betting there’s an 85% chance the Fed cuts rates in September, according to CME’s FedWatch tool. But with inflation still above target and job growth cooling, Powell’s wording could easily rattle markets.

“This could be the market-mover of the week,” strategist David Rosenberg said. “A hawkish Powell could put some real pressure on stocks.”

While most of the market yawned, Novo Nordisk jumped more than 4% after the FDA gave accelerated approval for its blockbuster obesity drug Wegovy to treat a form of serious liver disease.

Duolingo also surged nearly 5% after KeyBanc upgraded the stock, setting a price target that suggests more than 40% upside. Analysts said fears about AI eating into its business are overblown.

Meanwhile, crypto markets were a different story. Bitcoin tumbled about 2% to $115,000 after briefly hitting a new all-time high last week, while ether slid 4%. The drop wiped out more than $500 million in leveraged bets, sending crypto-linked stocks like Bitmine Immersion and SharpLink Gaming lower.

Despite Monday’s lull, the S&P 500 and Nasdaq have logged gains in four of the past five weeks, with small-cap stocks leading the charge. Investors are clearly betting on Fed rate cuts ahead, but this week’s flood of data and Powell’s speech will test just how much optimism Wall Street can hang on to.

CNBC, Reuters, and Business Insider contributed to this report.