Wall Street's main indexes rose on Friday, setting the S&P 500 and the Nasdaq for a fourth week straight week of gains on easing bets of another super-sized interest rate hike on evidence of cooling inflation.
The S&P 500 is up 16% from its mid-June low, with the latest boost coming from a slower-than-expected rise in consumer prices and a surprise drop in producer prices in July.
The benchmark index has recovered 50% of its bear market loss after it crossed a technical level of 4,231 points.
There are some troubling signs that the economy is not falling off a cliff. Lindsey Bell, chief markets and money strategist at Ally, said the bulls can point to a very strong jobs market and corporate earnings that did not suggest a slowdown was hurting company profits.
Stocks big and small have recovered impressively in the last two months despite a mixed bag of economic data. While policymakers remain firm about further tightening monetary policy until inflation pressures are fully abated, traders believe that the Fed is going to raise rates by 50 basis points next month instead of a 75 basis points hike.
Since March, the Fed has increased its policy rate by 225 basis points as it struggles to cool demand without a rise in layoffs.
Ten of the 11 major S&P 500 sectors advanced in early trading, with communication services and information technology stocks leading the gains.
High-growth and technology stocks such as Apple and Alphabet went up 0.8% each as investors returned to riskier assets and Treasury yields fell after a volatile week.
Growth stocks have underperformed their value counterparts so far this year due to concerns that rising Treasury yields due to aggressive rate hikes will pressure their valuation.
According to a Bank of America note, investors bought $7.1 billion in equities in the week to Wednesday, with the U.S. growth stocks recording their largest weekly inflow since December last year. Adam Sarhan, chief executive of 50 Park Investments, said that the major indices are trading near highs going back to May and June and that they are now serving as near-term resistance.
The banks were still on track to extend their rally for sixth straight week, even though they were 0.3% lower.
American households' near-term outlook for inflation eased again on easing gasoline prices, as U.S. consumer sentiment went up in August from a record low this summer. The Dow Jones Industrial Average was up 99.94 points, or 0.30%, at 33,436, up 99.94 points. The S&P 500 was up 22.64 points, or 0.54%, at 4,229. The Nasdaq Composite was up 98.18 points, or 0.77%, at 12,878, up 91.18 points. After a rough start to the year, better than expected second quarter earnings from corporate America have supported the upbeat sentiment for U.S. equity prices.
Of the 456 S&P 500 companies that have reported earnings so far, 77.6% have exceeded profit expectations, according to Refinitiv data.
Rivian Automotive Inc grew by 1.3% as the electric-vehicle maker reported better than expected second quarter revenue.
Advancing issues outnumbered decliners by a 2.35 to 1 ratio on the NYSE and a 1.80 to 1 ratio on the Nasdaq.
The S&P index recorded three new 52 week highs and 29 new lows, while the Nasdaq recorded 28 new highs and 18 new lows.