Wall Street heads into Friday in a state of moderate strength. Benchmarks hover near record highs, growth drivers remain in play, but investors are keeping their powder dry ahead of key inflation numbers. All eyes are on the market's reaction to PCE data today. Soft numbers could trigger a breakout to new highs. A hotter reading would likely prompt a round of profit-taking.

Yesterday's session was impressive: the S&P 500 edged up 0.32% to a fresh all-time high, the Nasdaq gained 0.53%, and the Dow rose 0.16%. Bulls continue to hold the initiative, underpinned by solid economic indicators and persistent optimism around artificial intelligence.

Market recovery and macroeconomic foundations

The Nasdaq 100 came within striking distance of the 23,700 mark, although conviction at this level remains lacking. This move coincided with the release of revised economic data showing US GDP growth at 3.3% in the second quarter, beating earlier estimates.

This upward revision was a meaningful boost for buyers, reflecting the US economy with more underlying strength than previously thought.

Capital expenditures in artificial intelligence, cloud computing, and software remain core drivers. These sectors have shaped the Nasdaq 100's trajectory in recent years, and their outperformance in GDP has become a key validation that fundamentals are still fueling strong demand for tech stocks.

Consumer spending remains resilient as well, lending balance to the growth story. Both corporate investment and household outlays are contributing to market strength.

Taken together, macroeconomic data is bolstering the bull case for the Nasdaq 100. The US economy looks more robust, suggesting major tech names could keep growing revenues even as the Federal Reserve remains cautious.

Inflation acts as limiting factor

Despite better GDP data, the inflation backdrop remains a risk. The core PCE price index—the Fed's preferred gauge—held at 0.3% month-on-month and 2.8% year-over-year. On the surface, stability is welcome, but inflation has now been running above the Fed's 2% target for several months.

This sticky inflation gives policymakers no reason to soften their stance. Despite mounting political pressure, the Fed is forced to acknowledge that upside risks to inflation persist.

For markets, that implies a more cautious outlook for rate cuts. Any data confirming an uptick in prices quickly strengthens hawkish rhetoric and puts pressure on the Nasdaq 100, where high-growth stocks are especially sensitive to borrowing costs.

This creates a genuine dilemma. On the one hand, the economy is growing faster than expected, supporting corporate earnings and the Nasdaq's elevated multiples. On the other, core inflation remains too high, forcing the Fed to keep rates higher for longer and increasing the risk of a sustained plateau.

Role of macroeconomic catalysts

Over the coming weeks, inflation prints and comments from Fed officials will drive market direction. Softer than expected PPI or CPI numbers, or signals of policy easing, could provide fresh impetus for the Nasdaq.

Conversely, a surprise pickup in core inflation or more hawkish commentary would likely spark risk aversion.

Particular attention will be on Friday's PCE figure. The data will determine whether the Fed can move toward a September rate cut or opt for delay. For the Nasdaq 100, this is a pivotal event, shaping the short-term market outlook.

Technical outlook: crucial point stays at 24K

For now, the Nasdaq 100 is consolidating in the 23,600–23,700 resistance band, building a base after the recent rally. The 24,000 mark looms ahead as both a psychological milestone and a technical threshold; clearing this level would open the way for a fresh leg higher.

Bullish scenario:

If the index breaks through 23,700–23,750 and establishes itself above 24,000, upside targets move to 24,200–24,400. This scenario becomes more plausible if inflation prints are benign or if Fed officials adopt a dovish tone. Confidence that rate cuts are imminent would restore an advantage for growth stocks.

Bearish scenario:

Failure to break 23,700 would see the index retreat toward support near 23,400–23,450, with a deeper pullback exposing 23,150–23,200. A break below 23,000 would intensify selling and put the 22,750 low in play. This outcome would likely materialize if inflation data disappoints or Fed rhetoric turns more hawkish.

In short, the 24,000 level has become a critical inflection point. In the coming weeks, macro data and the Fed's tone will determine whether the Nasdaq 100 can sustain new highs or must endure a corrective phase.

For traders, the setup is ideal: clear key levels, well-defined catalysts, and heightened volatility. The only unknown is direction—what remains is to watch which way the market resolves the standoff.