PCE Inflation Stays Sticky at 3.7% — Stocks Dip as Nvidia Delivers Record-Breaking Earnings

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U.S. stocks edged lower Wednesday as the Federal Reserve’s preferred inflation gauge held steady at an elevated level, while Nvidia delivered another record-shattering quarterly report after the bell that reinforced the AI boom’s staying power.

The Personal Consumption Expenditures (PCE) price index — the Fed’s favored inflation metric — came in at 3.7% year-over-year for July, unchanged from June and slightly above the 3.6% consensus forecast. Core PCE, which excludes volatile food and energy prices, held at 3.3%, also unchanged from the previous month. Both measures remain well above the Fed’s 2% target, marking the 65th consecutive month inflation has exceeded that goal.

PCE Data: Sticky Inflation Keeps Fed on Hold

The Commerce Department reported that the PCE price index rose 0.2% month-over-month in July, slightly above the 0.1% estimate. The data confirms that while headline inflation has moderated from its peaks, the path back to 2% remains uneven and prolonged.

What this means for the Fed:

Inflation has now exceeded the Fed’s 2% target for more than five years
The sticky data keeps pressure on the Fed to maintain its current restrictive policy stance
Borrowing costs for mortgages, auto loans, and credit cards are likely to remain elevated
The Fed’s “higher for longer” approach appears entrenched

The inflation data arrived just days before Fed Chair Kevin Warsh delivers his first major speech at the Jackson Hole Economic Symposium on Friday. Markets will be watching closely for any signals on the Fed’s policy path. Warsh has already signaled a hawkish stance, stating: “There is no soft inflation target. There is only one target, and it is 2 percent”.

Market Reaction: Stocks Dip Ahead of Nvidia

In regular trading Wednesday, the major indexes closed modestly lower as investors digested the sticky inflation data and awaited Nvidia’s quarterly results.

Index	Close	Change
S&P 500	7,675.70	-0.02%
Dow Jones	53,463.88	-0.21%
Nasdaq	26,130.20	-0.08%

Source: AP News

The market’s cautious tone reflected the tension between sticky inflation data and the potential for a blowout Nvidia report to reignite the AI rally.

Nvidia’s Blowout Quarter: 962 Billion Reasons to Believe in AI

After the bell, Nvidia delivered another historic quarter that exceeded already-high expectations.

Q2 FY2027 Results:

Metric	Q2 2026	Year-over-Year Change
Revenue	$962.21 billion	+106%
Data Center Revenue	$890.23 billion	+117%
Adjusted EPS	$2.22	+120%
GAAP EPS	$2.46	+128%
Gross Margin	75.0%	—

Source: Nvidia Investor Relations

Nvidia’s quarterly revenue now approaches $1 trillion, a scale unmatched in corporate history. The company’s market cap surged to $5.4 trillion following the report.

Key Highlights:

Data center revenue of $890 billion now accounts for 92.5% of total revenue
AI infrastructure demand continues to accelerate, driven by Blackwell Ultra and the upcoming Vera Rubin architecture
The company returned $260 billion to shareholders in the quarter
Q3 revenue guidance of $1080 billion signals continued momentum

CEO Jensen Huang declared: “Artificial intelligence has reached a turning point. It is delivering real results. Its tokens are both efficient and profitable. Today, compute is revenue”.

What This Means for Urban Communities and Working Families

The combination of sticky inflation and a booming AI sector paints a complex picture for working families:

The Challenge:

Elevated borrowing costs: With inflation stuck above 3.5%, the Fed has little room to cut rates. Mortgage rates, auto loans, and credit card interest will remain high
Higher prices persist: Inflation at 3.7% means the cost of groceries, housing, and everyday goods continues to rise faster than wages for most workers
The “AI divide”: While tech giants and their shareholders reap the rewards of the AI boom, the benefits have not yet reached Main Street

The Opportunity:

Job creation: AI infrastructure buildout is creating jobs in construction, manufacturing, and tech
Productivity gains: AI tools could eventually lower costs and improve services across the economy
Innovation: The AI boom is driving investment in American infrastructure and manufacturing

The Bottom Line

Inflation remains stubbornly sticky at 3.7%, keeping pressure on the Federal Reserve and working families alike. Nvidia’s record-breaking quarter — $962 billion in revenue, with data center sales up 117% — shows that the AI boom is accelerating, not slowing.

For working families, the message is clear: inflation isn’t going away, and neither are elevated borrowing costs. The economy is splitting into two tracks — one for tech giants riding the AI wave, and another for families struggling with the cost of living.