Weekly Market Recap: Tech Leads U.S. Rally Amid Strong Economic Data

Market Overview

U.S. equities rallied this past week, buoyed by positive economic data and strong earnings from big tech companies. The S&P 500 rose 3.9%, the Nasdaq Composite surged nearly 5.3%, and the Dow Jones added 3%. Small caps also gained, advancing 2.9%. Inflation data, including a cooler-than-expected Producer Price Index (PPI) and steady Consumer Price Index (CPI), reinforced disinflation trends, supporting the market rally. European markets followed suit, with the STOXX 600 rising 2.5%, as steady Eurozone GDP and expectations of rate cuts by the Bank of England bolstered investor sentiment. Asian markets also ended higher, led by Japan’s strong GDP results and gains in technology stocks.

Federal Reserve Insights and Economic Roundup

Bond markets saw mixed movements, with the Bloomberg Aggregate Bond Index trading higher as Treasury yields dipped. Rate cut expectations fluctuated throughout the week, influenced by robust economic data. Despite a low probability of a 0.50% rate cut in September, markets remain sensitive to potential shifts. Commodities had a volatile week, with oil prices falling 2% due to weak housing data and concerns about Chinese demand. The U.S. dollar weakened, while gold reached new record highs. Retail sales rebounded in July, driven by strong auto sales, though this is unlikely to change the Federal Reserve’s stance on rate cuts.

The Week Ahead

Key economic data scheduled for the upcoming week includes the Leading Index, Philadelphia Fed Non-Manufacturing Activity, and the release of FOMC meeting minutes. Additional reports on mortgage applications, jobless claims, and home sales will provide further insights into the economy’s health. The Jackson Hole Economic Policy Symposium, featuring a speech by Fed Chair Jerome Powell, will be closely watched for any indications of future monetary policy shifts.