Stocks have once again ended a trading week having hit new records.

Signs of an inflation cooldown prompted markets to grow more optimistic about the prospect of Federal Reserve interest rate cuts and stocks rallied as a result, with all three major averages hitting record highs on Wednesday.

For the week, the Nasdaq Composite (^IXIC) rose more than 2% while the S&P 500 (^GSPC) popped more than 1.5%. The Dow Jones Industrial Average (^DJI) gained more than 1%, closing above 40,000 for the first time ever on Friday.

In the week ahead, highly anticipated earnings results from Nvidia (NVDA) are expected to be the key catalyst for markets. Results from Target (TGT), Palo Alto Networks (PANW), and Lowe’s (LOW) will also be closely tracked by investors.

The week is expected to be quieter on the economic front, with updates on activity in the manufacturing and services sectors as well as the final reading of consumer sentiment for May on tap. Minutes from the Fed’s May meeting are also expected on Wednesday afternoon.

April’s reading of the Consumer Price Index showed core prices, which strip out the more volatile costs of food and gas, rose 3.6% over last year — the lowest annual rise in three years. This prompted investors to price in two full interest rate cuts this year for the first time since early April.

The move brings the market closer in line with the Fed’s projections of two or three interest rate cuts at some point this year. BMO Capital Markets chief investment strategist Brian Belski listed investors’ alignment with the Fed on interest rate cuts as a reason supporting his call for the S&P 500 to end 2024 at 5,600, an increase of less than 7% from Friday’s close.

For investors, the key question will be whether this bullish narrative is sustainable or if the market will once again jump ahead of the Fed as it did in early 2024 when investors priced in nearly seven interest rate cuts on the back of positive economic data. The first test will come on Wednesday with the release of minutes from the Federal Open Market Committee’s May meeting, which will provide a deeper look at the discussion among officials. “The minutes from the May FOMC meeting should sound more hawkish on the margin than Chair Powell’s press conference,” Bank of America US economist Michael Gapen wrote in a note to clients. “Though Powell signaled the bar for hikes is high and that standing pat is the proper response to disinflation stalling out, others on the committee were more concerned about whether policy was doing enough.”

AI leader Nvidia is set to report earnings after the closing bell on Wednesday, capping off the reports from America’s tech giants. Expectations are once again sky-high for the chipmaker. Analysts expect Nvidia grew earnings by more than 400% in the prior quarter while revenue increased 242%.

For the second quarter, analysts project earnings growth of more than 120% and nearly 100% revenue growth.

“We see enough room for NVDA to post FQ1E (April) revenue potentially as high as $26B (data center ~$22-23B) and potentially guide to ~$27-28B in total revenue (data center ~$25-26B) — both good enough to keep the stock biased higher, in our view,” UBS analyst Timothy Arcuri wrote in a note to clients previewing the earnings release.

The stock is up more than 86% in 2024 and more than 200% over the past year since Nvidia kicked off the AI hype train with its blowout earnings report in May 2023. Given how Nvidia’s stock has impacted other potential AI plays, and the broader market as a whole, all eyes will be on whether the company can once again live up to the hype.

“If [Nvidia] can continue their enviable, remarkable string of beating estimates, raising guidance, then beating the raised guidance next quarter, that means that the AI trade can and will proceed apace,” Interactive Brokers chief strategist Steve Sosnick wrote in a research note on Thursday. “If there is even the slightest sign of weakness, however, much more than that stock alone will suffer.”