The bull run since October last year has had two major things going for it: The A.I. revolution and a mostly Goldilocks economy. Their combined impact is starting to look notably weaker, and if economic data the rest of this week fails to perfectly thread the needle, stocks look at risk.

Nvidia (NVDA) is doing great, but it's more alone than ever. The 10-day correlation between it and the S&P 500 fell apart the past two weeks and flipped negative for the first time all year. No one denies the extraordinary breakthroughs the company is making, but earnings made it clear that practically no other chipmaker is on the same track, and many cloud service providers are seeing no impact – and in some cases negative impact – from A.I. on their own growth trajectory.

That puts more pressure on the macro narrative to power the bull market, and it's dicey to say the least. Inflationary pressures show little sign of abating enough to give the Fed clearance to cut with a good conscience, but some of the other data is looking like we might need it. Job openings saw the most meaningful downturn all year, and manufacturing activity is straining amid sticky cost pressures.

As a result, the old bad-is-good routine isn't working as well for stocks lately. Bad data can be spun as good if it means the Fed will juice the economy, but if inflation prevents them from doing so, we're finally at the end of that narrative leash as well.

What's still unclear is how stocks would respond to truly bad jobs data, but we haven't quite gotten there yet. So far, the backbone of the economy remains mostly solid, but hasn't been a great catalyst for equities broadly. Small-caps or the equal-weight index reflect this catch-22 over the past week: when the Treasury curve widened out as the 10-year yield rose to the top of its range, stocks didn't like it. But when it contracted back on weak data, stocks didn't catch a rally either.

This has been the key riddle for years – when will bad data actually be bad for stocks? So far that regime has never really materialized sustainably, but if Nvidia is no longer supporting the index, the door should be back open for bears if the data this week fails to thread the "Goldilocks" needle absolutely perfectly. Services ISM is up next and carries much more weight than manufacturing. If it tilts stagflationary again like Manufacturing did on Tuesday, investors shouldn't like it.

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