U.S. stocks climbed on Friday, giving back their strongest week of the year, as fears of a possible recession waned. The S&P 500 and Nasdaq registered a seventh day of consecutive gains, rebounding from losses two weeks ago when weak economic data and fear of a recession rattled investors.
All three major indexes notched their biggest weekly percentage gains since late October, with the S&P 500 and Nasdaq breaking a four-week losing streak.
The rally was led up by optimistic economic data, such as encouraging signs from the consumer price index and retail sales, that inflation is indeed continuing downward toward the Fed’s 2% target. Additionally, the spending of consumers has been very strong, reducing fears of an impending recession.
In preparation for the Jackson Hole Economic Symposium, investors are also eagerly waiting for comments from Federal Reserve Chair Jerome Powell that may further shed light on the trajectory of interest rates. Currently, the market is pricing in a 74.5% probability of a Fed 25 basis point rate cut at its September meeting.
Friday’s data showed US single-family housing starts fell to a 1.5-year low in July, while consumer sentiment for August showed stronger-than-expected improvement according to the University of Michigan.
It was the financials leading the charge, up the most of any S&P 500 sectors, and industrials taking a hit. Notably, Applied Materials and Amcor declined after their earnings reports. Volume on U.S. exchanges was a shade below the 20-day average, further showing restraint by investors with cheerfulness as next week’s Fed meeting originates.
This enthusiastic outperformance could be a sign of changing market sentiment, with investors becoming more convinced that a recession can be avoided and that the Fed will soon cut rates.
Do you have a news tip for Lakshmishree reporters? Please email us at media@lakshmishree.com
Source: Moneycontrol
News Desk
