4 events this week will dictate the fate of markets through year-end

As the stock market has gotten more volatile over the last month — currently mired in a four-day skid — the narratives driving those price swings have only crystallized further.

It’s really a two-horse race of market drivers at this point: (1) how investors are feeling about the red-hot AI trade, and (2) what the Fed plans to do with interest rates.

In terms of those two storylines, this week could not be bigger. Here’s what’s going on, and what hangs in the balance:

The headliner: Nvidia earnings, Nov. 19 (Weds)

What could happen:

Nvidia is the most valuable company in the world and the undisputed king of the AI trade, which could end up working against it. Expectations are sky-high, and the market has shown a recent propensity to punish high-flying AI stocks, regardless of earnings strength. (Palantir would like a word.)

Investors will be laser-focused on what the company says about chip demand, and if they address concerns that deals in the AI space are getting too “circular.” Also hanging over earnings are the high-profile shareholders who have recently sold their entire stakes in Nvidia, most notably SoftBank and Peter Thiel’s hedge fund.

If you dare underestimate Nvidia, do so at your own peril. The $4.6 trillion behemoth has managed to outmaneuver expectations many times before.

The first opener: September jobs report, Nov. 20 (Thurs)

What could happen:

While Nvidia earnings are the main event this week, the much-delayed jobs report will be the most important input for how investors feel about a possible December rate cut.

Odds of another 25-basis-point cut have tumbled over the past week, after the White House threw into question whether certain employment data would be released at all. Investors are worried that the Fed will play it safe with rate cuts if they have an incomplete data picture.

A scenario that could really move the dial is a surprisingly weak nonfarm payroll figure that causes rate-cut odds to spike again. That would likely be bullish for stocks. Meanwhile, a strong report would likely reaffirm the more bearish view that the Fed would hold rates unchanged.

The second opener: Fed meeting minutes, Nov. 19 (Weds)

What could happen:

While these minutes cover a meeting that happened three weeks ago, investors will still be looking for any hints of rate-cut skepticism, especially as it relates to a lack of data availability. This will likely be looked at in tandem with the labor-market data released the following day.