“Market Momentum: US Stocks Rally as Recession Fears Ease and Tech Giants Lead Gains”

US Stocks Soar: S&P 500 and Nasdaq Extend Winning Streak Amid Economic Optimism 

New York, August 2024 — US stocks closed at session highs on Monday, continuing a robust rally from last week.  S&P 500 (^GSPC) gained nearly 1%, while the Dow Jones Industrial Average (^DJI) rose by 0.6%.  tech-heavy Nasdaq Composite (^IXIC) led the charge, increasing by more than 1.4%. se gains mark the eighth consecutive daily win for both the S&P 500 and Nasdaq, the longest winning streak since November of last year, according to data from Bespoke Investment. 

Technology and Consumer Discretionary Stocks Lead Charge 

rally was fueled by strong performances in the Technology and Consumer Discretionary sectors. Chipmaker Nvidia (NVDA) and electric vehicle giant Tesla (TSLA) were standout performers, with Nvidia rising more than 4% and Tesla gaining 3%. Nvidia, a heavyweight in the AI chip market, has seen its stock price surge by approximately 30% since August 7. Analysts at Goldman Sachs reiterated a bullish stance on Nvidia, maintaining stock on its “Conviction List” and predicting continued strong demand from large Cloud Service Providers and enterprises. 

Advanced Micro Devices (AMD) also contributed to the sector’s strength, climbing more than 4% after announcing its plan to acquire hyperscale solutions provider ZT Systems in a deal valued at $4.9 billion. Alphabet (GOOG, GOOGL) added to positive momentum, with shares increasing by more than 1%. 

Market Sentiment Shifts as Recession Fears Ease 

recent stock market rally follows a strong week of gains, signaling a shift in sentiment as concerns about a potential recession ease. Last week’s rally recouped losses from the early August sell-off, which had been driven by fears of economic downturns. However, the concerns have been alleviated by encouraging data on inflation and consumer spending, which suggest that the US economy is on a more stable footing. 

Goldman Sachs chief economist Jan Hatzius has revised the firm’s recession probability for the next 12 months down to 20% from 25%. This adjustment comes just weeks after Hatzius had raised recession likelihood to 25% in response to a weak July jobs report. Hatzius pointed to improved economic data and a healthy corporate earnings season as key factors in a more optimistic outlook. ” Economy is still doing fine,” Hatzius said, adding that lower recession risk supports the forecast that the Federal Reserve will cut interest rates by only 25 basis points at its September meeting. 

Focus Turns to the Federal Reserve and Jackson Hole Symposium 

Investors are now looking ahead to Federal Reserve Chair Jerome Powell’s upcoming speech at the Jackson Hole Economic Symposium on Friday.  the market is keenly watching for any signals from the Fed that could solidify expectations of a rate cut in September. As of Monday, traders were pricing in a 72% chance of a 0.25% rate cut and a 28% chance of a 0.50% cut, according to the CME FedWatch tool.  release of minutes from the Fed’s July meeting on Wednesday could further influence the expectations. 

Retail Earnings in Focus 

On the corporate front, investors are anticipating more insights into the health of the consumer sector as major retailers prepare to report quarterly earnings this week. Lowe’s (LOW) is expected to post its fiscal Q2 earnings on Tuesday, with analysts forecasting a decline in revenue and earnings per share compared to last year. Following disappointing results from Home Depot (HD) last week, Lowe’s is likely to report a similar trend as consumers continue to scale back on home renovation projects amid a challenging macroeconomic environment. 

Or retailers, including Target (TGT), Macy’s (M), TJX Companies (TJX), and BJ’s Wholesale Club (BJ), are also set to release earnings, providing further insight into consumer behavior and economic trends. 

Conclusion 

The US stock market’s continued rally highlights growing optimism among investors as fears of a recession recede. With technology stocks leading the charge and key economic data easing concerns, the market is poised for further gains. However, all eyes will be on the Federal Reserve and the upcoming Jackson Hole Symposium as investors seek clarity on the future direction of interest rates and the overall economic outlook.