On Friday, US stocks continued with their mid-summer rebound, as long-term Treasury yields and the US dollar fell.
Meanwhile, Wall Street was celebrating positive corporate reports, even though labor costs went up and inflation showed no signs of waning.
The positive forecasts from Amazon.com and Apple Inc. indicated that giant companies are resilient enough to survive an economic downturn.
As for energy giants like Chevron Corp and Exxon Mobil, they also recorded strong corporate results because of a surge in natural gas and crude oil prices.
There was a 1% gain in the Dow Jones Industrial Average, while the S&P 500 rose by 1.4% and the Nasdaq 100 was able to climb by almost 2%.
The Nasdaq and S&P 500 have now managed to record their biggest monthly rises that had last been seen in 2020.
Regardless, the second quarter still saw a strong increase in the US labor costs, as wage growth continued to enjoy gains due to a tight jobs market.
This is expected to keep inflation high. There was also a 1.1% in consumer spending in the previous month, which makes up two-thirds of the economic activity in the US.
With inflation rising in major markets and global central banks hiking rates to battle it without affecting growth, there have been mostly positive reactions in riskier markets, such as stocks.
Even a slight softening in the stance of policymakers results in a positive reaction and the same happened in the US stock market.
Data showed on Thursday that the GDP had declined for the second quarter in a row, which pushed up the stock market on bets that the Fed would increase rates more slowly.
Meanwhile, numbers in the euro zone surpassed expectations on Friday, but recession fears continue to rise because of the energy crisis happening due to the Russia and Ukraine war.
There was a 1.2% gain in the MSCI’s index of global stocks, which was recording its best month that had last happened in November 2020.
This was mostly because of the broad gains seen in European markets, as there was a 1.3% rise in the continent-wide STOXX 600 index.
Even though stocks enjoyed a positive ending for the month, analysts said that the broad equity index would see it’s risk-reward muted.
Even though a soft landing has been priced in by equities, economic activity is likely to see a deeper slump.
On Friday, there was a decline in Treasury yields, after data on wage growth and labor costs showed that inflation was still troubling.
Plus, it also fueled fears of a recession, as the US Federal Reserve tries to cool down the economy without killing growth.
Friday’s choppy trading also saw the US dollar rise from its low of three weeks, as the US economic data indicated that inflation was still high, which would mean more tightening.
The greenback had last dropped by 0.3% against a basket of its peers but was still recording gains for the second month in a row.