U.S. Stocks Rally As Recession Worries Ease

U.S. stocks ended higher, marking significant weekly gains amid easing recession fears. The S&P 500 and Nasdaq saw their seventh consecutive session of growth. Investor optimism was fueled by positive economic data, suggesting the Federal Reserve might cut rates soon. All eyes are now on the upcoming Jackson Hole Economic Symposium.

U.S. stocks ended higher on Friday, continuing their biggest weekly percentage gains of the year as economic downturn fears diminished and investors looked ahead to next week's Jackson Hole Economic Symposium. The S&P 500 and the Nasdaq marked their seventh consecutive session of gains, recovering losses from a significant dip two weeks ago.

All three indexes recorded their largest weekly percentage gains in months, with the S&P 500 and the Nasdaq achieving their first weekly gain in five weeks. "Today's market performance continues the trend of rebounding from earlier recession concerns," said Greg Bassuk, CEO of AXS Investments in New York.

"Positive economic data is driving this rally, boosting investor confidence that a recession will likely be avoided and that the Federal Reserve may start cutting rates in September." High profile economic data released this week, including the Labor Department's consumer price index and the Commerce Department's retail sales report, reassured investors that inflation is moving toward the Federal Reserve's 2% target and consumer spending remains robust.

Data on Friday revealed a drop in U.S. single-family housing starts to a near 1-1/2-year low in July, while the University of Michigan's preliminary August consumer sentiment showed better-than-expected improvement. Global central bank officials will speak at the Jackson Hole symposium next week, with Federal Reserve Chair Jerome Powell's keynote speech on Friday potentially setting expectations for U.S. rate cuts.

"All eyes will be focused on Powell's comments next week," Bassuk noted. "Market movements this year have been consistently influenced by the anticipation of Fed rate cuts." Chicago Fed chief Austan Goolsbee warned in an NPR interview that central bank officials should avoid maintaining restrictive policies longer than necessary.

Preliminary data indicated that the S&P 500 gained 11.34 points, or 0.20%, to close at 5,554.56 points, while the Nasdaq Composite gained 37.31 points, or 0.21%, to 17,631.81. The Dow Jones Industrial Average rose 95.62 points, or 0.24%, to 40,658.68. Shares of Applied Materials reversed earlier gains after the chip-making equipment firm projected stronger-than-expected fourth-quarter revenue.

Amcor reported a larger-than-expected decline in fourth-quarter sales, causing its U.S.-listed shares to drop following the announcement.