Flagging U. S. stocks are finally in high spirits this week. The three major indexes of US stocks rose at least 6 per cent this week for the first time since November 2020, as traders slashed Fed interest rate hikes and better-than-expected corporate earnings and macroeconomic data boosted investor sentiment.

Although US stocks have performed brightly this week, they will still be very volatile if the timeline is extended to the beginning of the year.

Societe Generale Securities Zhang Yidong team believes that as it is more difficult for the Fed to balance inflation and economic growth, the economy is likely to go into recession, and the bear market of US stock market recession is doomed.

Boosted by investor sentiment, the three major indexes of US stocks rose more than 6% during the week.

Judging from the performance of the week, the three major indexes of US stocks are all up more than 6%. The Dow rose 6.24%, ending the longest losing week in 1923 that ended eight weeks in a row last week. Last week, the S & P 500 rose 6.58%, and the Dow posted its biggest weekly gain since November 2020. The Nasdaq rose 6.84%, ending seven consecutive weeks of decline.

Concerns about high inflation and the Fed's path to raising interest rates have plagued the market this year, and investors are increasingly worried that raising interest rates could lead to economic contraction, which is the main reason for the bloodshed in US stocks. Recently, given that U. S. stocks have suffered a wave of selling, some investors have begun to absorb bargains.

Moreover, the panic seems to be dissipating as some corporate performance and economic data improve.

Strong earnings reports from some retailers this week pushed U. S. stocks higher. Macy's, Nordstrom, two discount retailers Dollar Tree and Dollar General achieved better-than-expected results in the first quarter, and all raised their guidance, leading to a big rise in the retail sector. Dollar Tree, beauty retailer Ulta Beauty and department store chain Ross Stores were the biggest winners in the S & P 500 this week, up at least 20 per cent each.

Key indicators showed that US inflation slowed in April, with the PCE price index rising 6.3 per cent year-on-year in April, down slightly from the previous figure and the smallest increase since November 2020.

In addition, traders slashed their expectations of a Fed rate hike. Traders expect the chances that the fed will reach its target range of 2.75% Murray 3% by the end of the year to 27%, down from 51% on may 19.

Under violent fluctuations, blindly copying the bottom is easy to be hit in the face.

Judging from this week, the rally in US stocks is undoubtedly a relief for traders, but in the long run, the situation in US stocks is still not optimistic.

The S & P 500, the benchmark U.S. stock index, is down 13% so far this year. If you strip out its worst five days, the return is 2.6%. Meanwhile,Excluding the five biggest gains, S & P is down 24 per cent since the start of 500.

Under the fear of inflation and recession, US stocks have been in a volatile market so far this year, and investors who cannot accurately judge the timing of volatility can easily be hit in the face by the market and pay a heavy price.

In response, Liz Young, head of investment strategy at SoFi, an investment institution, warned investors to be cautious about bottoming out. Young said in an interview with the media:

"now is not the time to chase and judge the bottom, the top, the inflection pointBecause to be honest, inflection points happen every day.Every day you feel like you're wrong, and that's when you start making mistakes. "

Is there a "high probability" of recession?

Such a big increase has also triggered a heated discussion among investors about the bottom of the market.

Bulls said that this magnitude of growth is a feature of the market bottoming out, and investors have realized that the stock market has fallen enough. Some analysts believe that in a bear market, it is perfectly normal for sentiment to briefly push up the stock market.

According to Joseph Saluzzi, co-head of stock trading at Themis Trading LLC, a financial institution, U. S. stocks entered a "buffer period" before entering the bear. Saluzzi said in an interview with the media:

"when the stock market falls to this point, it doesn't take much effort to rebound. And the rebound came quickly. " "the problem has not definitely gone away, but we are optimistic that we have found a bit of a middle ground between inflation and recession."

This coincides with the view of Societe Generale Securities Zhang Yidong strategy team.

Zhang Yidong believes that the current U. S. stocks "medium-term end" may have appeared, the main index close to or beyond the bear market dividing line, and then is expected to usher in a few months of "gasp" window.

But this does not mean that U. S. stocks will usher in a reversal, and then may continue the downward trend. He said: "This round of US stock market recession bear market may be doomed.

Zhang Yidong counted the cycle of raising interest rates in US history and found that it is a small probability that the economy will eventually achieve a "soft landing". The Fed is facing its most serious inflation challenge in 40 years, making it harder to balance inflation and growth, and this time it is likely to move towards recession.

In addition, if the current market is expected to close the rate of water, the spread of US Treasuries at all maturity will rapidly narrow in the coming months, when the market will issue a recession warning.