U.S. stocks are rising once more on expectations of an economic soft landing. Positive data allay fears about a recession after a severe sell-off earlier this month.
Since August 5, when a sharp decline caused the benchmark U.S. index to experience its most significant three-day decline in more than two years, the S&P 500 has increased by more than 6%. The Cboe Volatility Index, also called Wall Street’s “fear gauge,” has quickly returned to calm after plunging at a record-breaking rate from last week’s four-year highs.
This week’s reports on producer prices, retail sales, and inflation have been key factors in the turnaround. Earlier in the month, less-than-expected jobless data raised concerns about an impending economic slowdown. The positive data has strengthened the argument for investors who want to get back into many of the profitable trades that they have made this year, such as purchasing Big Tech stocks or placing a more recent wager on small—and mid-cap companies that saw an acceleration in July.
According to Edward Jones senior investment strategist Mona Mahajan, “there was a real growth scare that had emerged.” Since then, we’ve observed that the economic data has genuinely changed and become much more positive.
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