Inflation data collides with AI infrastructure earnings reports, and after reaching new highs, the US stock market faces a "double major test" this week.

The first week of earnings season for tech giants has concluded, and the market's performance has exceeded investor expectations. Despite mixed initial results, overall sentiment turned optimistic as concerns over AI capital expenditures gradually subsided. Following the unexpected release of non-farm payroll data last Friday, expectations for a Federal Reserve rate cut were recalibrated, leading to a strong finish for U.S. stocks over the weekend. The S&P 500 index rose 0.6% last Friday, returning to historical highs. As earnings season enters its second half, market focus will continue to be pulled in two directions: one, as more companies disclose their earnings, and two, whether economic data can provide calibration for the Federal Reserve, which is on the threshold of "raising rates or standing pat." The Consumer Price Index (CPI) scheduled for release this Wednesday has been highlighted by the market. Economists predict that both the overall CPI and the core CPI (excluding energy and food) will rise by 0.2% month-over-month. Inflation data at the wholesale level will be released on Thursday, with the Producer Price Index (PPI) expected to show a larger increase than last month. This week's economic data will culminate with Fridays retail sales and the University of Michigan consumer survey data. On the corporate front, the earnings calendar is relatively quiet this week: Cava Group (CAVA.US) on Tuesday, cloud infrastructure provider Nebius Group (NBIS.US) and Cerebras Systems (CBRS.US) on Wednesday, and Applied Materials (AMAT.US) on Thursday will successively release their results. Key inflation reports will set the tone for future rate hike paths. Each inflation data release has the potential to reshape policy narratives, and this week's CPI and PPI data are particularly important. Federal Reserve officials have shown divisions regarding the next steps for interest rates. Last weeks weak non-farm report added uncertainty to the policy outlookthe number of job openings fell while the unemployment rate slightly declined, sending mixed signals. However, given that the Federal Reserve is currently prioritizing inflation, if the data exceeds expectations or even just meets them, officials may be compelled to reconsider tightening policies. Bank of America Corp economist Stephen Juneau stated last Friday that last months CPI is likely a one-time anomaly, and a report in line with our expectations would strengthen the case for a rate increase in September for the Federal Reserve. The challenges facing the new Federal Reserve chairman are akin to those experienced during Powell's tenure. Amid unclear signals from the job market (monthly data is insufficient to assess overheating or cooling), persistent price pressures will continue to be a crucial factor in decision-making. Consumer inflation data will be released on Wednesday, followed by producer prices on Thursday. Economists expect both to rise slightly, but as last Fridays non-farm payrolls illustrated, the market is always most focused on surprises. AI infrastructure sentiment will be re-evaluated. Tech giants are outlining the direction of AI transformation through capital expenditures, product launches, and personnel changes. From the statements of large-scale vendors, most seem satisfied with the current state and remain optimistic. However, AI infrastructure companies are also a key barometer for measuring industry sentiment and international computing power development. This week, three major players are set to release earnings: Nebius Group, CoreWeave (CRWV.US), and Cerebras, which operate in distinctly different arenas from the Magnificent Seven of U.S. stocks. The stock performance of these three companies thus far this year mirrors the unevenness of the AI sector: Nebius has surged 122%, CoreWeave has risen 25%, while chipmaker Cerebras has plummeted 35% after an impressive IPO. The AI infrastructure boom may seem to be lifting all boats, but in reality, there is significant individual stock divergence. Just as the Magnificent Seven have had mixed results this year, there are clear winners and losers within the cloud computing, data center, and semiconductor sectors. Earnings reports in the coming days will reveal more changes in this landscape. At least, with the strong market support over the past two weeks, U.S. stocks have returned to historical highs, and these companies are currently in a favorable window for AI overall. Two developments reignite concerns over the independence of the Federal Reserve. Recently, U.S. Treasury yields have risen, reflecting an increased market perception of risk. Some observers argue that this reveals a "credibility shock" for the Federal ReserveWall Street now seems to be questioning whether central bank officials are willing to make tough decisions to curb inflation. Last Friday's employment data and this week's inflation report will jointly impact investorsespecially in the bond marketregarding their judgments on the Federal Reserves policy direction. However, two news stories broke at last week's close, which may again prompt scrutiny of the Federal Reserve's independence. One, the White House revived efforts to remove Federal Reserve Governor Lisa Cook through a letter stating that the president is "considering" her removal based on "the Supreme Court opinion from June 29, 2026." Two, White House National Economic Council Director Kevin Hassett made a surprising statement: Kevin Warsh has a long-standing close relationship with the president, and they regularly discuss the economy. Typically, Federal Reserve chairs do not communicate frequently with the U.S. president; even if they do, the central bank usually announces the agenda publicly as a matter of maintaining independence. How the market reacts to this and how much patience the bond market can maintain will be a focus of observation this week.