Wall Street concluded a tumultuous week with modest gains, largely recovering from Monday’s steep selloff that was triggered by recession fears and the unwinding of yen-funded carry trades. The S&P 500 rose 0.47% to 5,344.16, the Dow Jones Industrial Average gained 0.13% to 39,497.54, and the Nasdaq Composite added 0.51% to 16,745.67. This recovery brought the S&P 500 back within 5.7% of its all-time high set last month.The technology sector led the market’s rebound, providing the biggest boost to the major indices. Investors are now shifting their focus to next week’s economic data, particularly the reports on U.S. consumer prices and retail sales for July, which could provide fresh evidence on the chances of a soft landing for the American economy.Market sentiment is being heavily influenced by expectations of potential Federal Reserve rate cuts. Investors currently see a 55% chance that the Fed will reduce interest rates by 50 basis points at its next policy meeting on September 17-18, with a 25 basis point cut seen as having a 45% probability. As Bank of America strategist Michael Hartnett noted, ‘Now appears to be bossing the Fed into big rate cuts’.In the corporate sphere, Expedia Group saw a significant jump of 10.2% after beating analysts’ expectations for second-quarter profit. Conversely, Elf Beauty experienced a sharp decline of over 14% following disappointing earnings and revenue projections.Despite the week’s volatility, which saw the Dow plummet 1,000 points on Monday in its worst day since 2022, major indexes remain up for the year. This resilience is largely attributed to strong earnings in tech megacaps and optimism surrounding AI. However, as Glen Smith, Chief Investment Officer at GDS Wealth Management, pointed out, historical data suggests that more volatility could be on the horizon.
Key points
- Wall Street ended the week with slight gains, recovering from Monday’s steep selloff.
- Investors are focusing on next week’s economic data and potential Fed rate cuts in September.
- The technology sector led the market’s rebound, with companies like Expedia seeing significant gains.
- Despite recent volatility, major indexes remain up for the year, driven by strong tech earnings and AI optimism.
Contradictions👾While some sources emphasize the market’s recovery and positive sentiment, others highlight ongoing uncertainties and the potential for future volatility.
