Markets Steady After Economic Data Surprises: S&P 500 and Nasdaq on the Rise

The S&P 500 paused as investors evaluated new economic data. Despite the mixed results, Wall Street indexes are on track for their best weekly performance in 2023. The data alleviated recession fears, spurring expectations of a rate cut by the Federal Reserve next month, amid consumer and producer price control.

The S&P 500 paused on Friday as investors digested a spate of economic data that dispelled slowdown concerns and put Wall Street's primary indexes on course for their best weekly performance this year. The latest economic data was mixed; the Commerce Department's report showed that U.S. single-family homebuilding dropped to a near 1-1/2-year low in July, while the University of Michigan's survey indicated that consumer sentiment rose in August in line with expectations.

The S&P 500 and the Nasdaq have nearly recouped all of their losses from a recent rout that had pushed the Nasdaq into correction territory two weeks ago. The better-than-expected data calmed nerves over a potential recession in the world's largest economy. U.S. consumer and producer prices data this week indicated that inflation was moderating at a pace that would keep the Federal Reserve on track to start its monetary easing cycle with a 25-basis point rate cut next month.

"The Goldilocks is very much intact. The disinflation is happening, the consumer and job market are resilient and the economy overall is doing pretty well. We are seeing some softness but not weakness in jobless claims," said Scott Acheychek, Chief Operating Officer of REX Shares. Next week, market participants will look to minutes from the Fed's last policy meeting and remarks from Fed Chair Jerome Powell at the Jackson Hole symposium for more clues on the rate cut trajectory.

(With inputs from agencies.)