The sudden 'Black Trading Day' in early August seems to have been just a feint, with US stocks continuing to surge impressively. With eight consecutive gains, the strong trend once again highlights the resilience of the US stock market. In addition, VIX also fell more than 70% from its high this month, marking the fastest decline ever. Stocks are similarly impressive, rebounding more than 24% in the last 10 days, leading a group of chip stocks directly into a 'technical bull market'. Despite the August crash just two weeks ago, market confidence in US stocks has been reignited, with investors' optimism soaring and 'belief in US stocks' returning to the track. Recessionary expectations continue to decline, and the US economy is expected to achieve a 'soft landing'.$S&P 500 Index (.SPX.US)$ with an impressive streak of eight consecutive gains, which once again validates the US stock market's strong momentum. In addition, VIX also fell more than 70% from its high this month, marking the fastest decline ever. On the individual stock level, semiconductor stocks led the way with a rebound of over 24%, directly entering a 'technical bull market'. Despite the August crash just two weeks ago, market confidence in US stocks has been reignited, with investors' optimism rising sharply and 'belief in US stocks' returning to the track. $Nasdaq Composite Index (.IXIC.US)$ In addition, VIX also fell more than 70% from its high this month, marking the fastest decline ever. On the individual stock level, semiconductor stocks led the way with a rebound of over 24%, directly entering a 'technical bull market'. Despite the August crash just two weeks ago, market confidence in US stocks has been reignited, with investors' optimism rising sharply and 'belief in US stocks' returning to the track.

As of now,$NVIDIA (NVDA.US)$A rebound of nearly 30% in ten days, driving a group of chip stocks directly into a "technical bull market".

Despite the August crash only two weeks ago, market confidence in US stocks has been reignited, with investors' optimism soaring and 'belief in US stocks' returning to the track. Recessionary expectations continue to decline and the US economy is expected to achieve a 'soft landing'.

Recessionary expectations continue to decline, and the US economy is expected to achieve a 'soft landing'.

The recent release of four economic data points has strongly supported the market's sentiment, highlighting the possibility of a 'soft landing' for the US economy:

• Fall in inflation: In July, the Consumer Price Index (CPI) in the US rose 2.9% YoY, lower than economists' expected 3%, and lower than June's 3%. This indicates that inflation is slowing down, which may provide space for the Fed's future rate cuts.

• Decline in unemployment claims: Last week, initial jobless claims dropped to 0.227 million, lower than expected. This data indicates that although the unemployment rate increased in July, it may be due to hurricane affects and seasonal changes in the labor market rather than economic slowdown.

• Increase in consumer spending: Retail sales increased by 1% in July, exceeding the expected 0.3%, indicating that consumer spending remains strong, supporting the expansion of the economy.

• Increase in small business confidence: The confidence index for small businesses rose to its highest level since February 2022, indicating that business owners hold an optimistic attitude towards the future economy.

At the micro level, the latest financial reports from global retail giants have also released bullish signals, showing that the US consumer situation is still in a good state:$Walmart (WMT.US)$Q2 revenue and net income both exceeded expectations and raised full year performance guidance; Klarna, the world's largest 'buy now pay later' service provider, said that US consumers have shown no signs of reducing their spending. All signs show that US consumers still maintain consumption resilience in the face of high prices and borrowing costs.

Strong US economic data has greatly eased market concerns over economic slowdown. After the global stock market plunged less than two weeks ago due to concerns over the recession of the US economy, market confidence quickly returned, with investors supporting the stock market with 'real money' - Deutsche Bank's fund flow data shows that investors who reduced their stock investments during the turbulent period in early August last week significantly increased their holdings of stocks. Deutsche Bank said that the fully commissioned investment fund management company's holdings jumped greatly last week, fully recovering the previous week's decline, and is now far above the average level. Massive cash has flooded into index options, large tech stocks, cyclical stocks and defensive stocks.

In addition, economists' bets on economic recession are also slowing down. According to the latest survey, most economists expect the Fed to cut rates by 25 basis points at each of the three remaining meetings in 2024, an increase from the previous month. At the same time, economists generally believe that the likelihood of the US economy falling into recession is low.

The survey results show that economists generally believe that the US economy will continue to grow at a pace close to the trend until at least 2027. The median of a small-sample survey shows that the likelihood of an economic recession is only 30%, which has not changed much since the beginning of the year.

Wall Street banks are also oscillating in their predictions of economic recession. Goldman Sachs' latest research report lowered its probability of a US economic recession to 20%, while earlier this month, its economists raised its probability of the US economy entering a recession from 15% to 25%.

Goldman Sachs economists said that a healthy non-farm employment report on September 6th could "possibly" prompt Goldman Sachs to lower its probability of an economic recession to 15%. Goldman Sachs' prediction had remained at 15% for nearly a year prior to August.

They added that unless there are other adverse surprises in the employment report, Goldman Sachs will be more confident in its prediction of a 25-basis-point rate cut at the Federal Reserve meeting than a 50-basis-point cut.

As of now,$CME Group (CME.US)$According to the FedWatch tool of S&P 500 Index, the market has fully absorbed the expectation of a rate cut by the Fed in September, but the probability of a 50 basis point rate cut has decreased to 24.5%.

Since the rate cut has been revealed, how to deal with it has become the focus of global market participants. According to CICC, September is likely to start cutting interest rates, but the overall rate cut under the benchmark scenario of a soft landing will be limited. Among various types of assets, the order of inclusion in the rate cut expectation is: interest rate futures > gold > copper > US bonds > US stocks.

Before the rate cut, the denominator assets such as US bonds and gold can be held, but due to expected rushing and limited space for overall rate cuts, more emphasis should be placed on band trading. After the rate cut, as the fundamentals gradually stabilize, it is possible to switch to cyclical assets and sectors.

Can the market continue to rebound? Investors need to remain vigilant.

The strong rebound of the US stock market has fueled optimism, and many believe that the market's upward trend will remain strong.

According to the latest monthly institutional survey by Bank of America, despite the turbulence in the global financial markets, investors' optimistic sentiment towards US technology giants and their expectations of an economic soft landing have not weakened. The survey results showed that respondents' expectations of a soft landing rose from 68% in July to 76%.

Mike Reynolds, vice president of investment strategy at Glenmede Trust Company, said, "A set of data this week suggests that the sky has not collapsed as some investors have begun to worry. So far, all the data we have received before (the next Fed meeting) has provided strong arguments for a rate cut."

Goldman Sachs even gave a "precise trading point". Scott Rubner, managing director and strategist at Goldman Sachs Group, said that the stock market will set a new historical high in the next four weeks and then experience a period of decline. He said that about 50% of companies will enter a restricted period on September 13, and there will be a large number of bid orders from now until then.

In addition, Rubner expects the US stock market to reach a record high at the end of the year. His target price at the end of the year is 6000 points, which means that the index will rise by about 7% from its current level.

"The S&P 500 index will hit new highs in the fourth quarter led by November and December," he predicted, adding that the record $7.3 trillion US money market fund will flow into stocks and bonds after the US election in early November.

But worries are still evident underneath the optimism. Since the sell-off in early August, the overall trading volume of the stock market has shown a downward trend, indicating that market hidden concerns still exist.

Nicholas Colas, co-founder of research institution DataTrek Research, said, "At least before the volatility index (VIX) stabilized below 19.5 (long-term average value), we need to respect the market's uncertainty and remain humble when trying to hit bottom in the market or individual stocks."

JPMorgan believes that the market sell-off in early August may be a harbinger of future trends, and concerns about economic growth may be the next major catalyst. JPMorgan emphasizes that there may be more sell-offs in the future. Although many investors are still afraid after arbitrage trading burst this month, it is unlikely that they will rush to adopt this strategy again, which may cause future volatility, but other incentives are still brewing.

Barry Bannister, chief stock strategist at well-known investment bank Stifel, also called on investors to act cautiously last week. He said that if the economy continues to slow down and eventually enters a recession, the bear market will come as inflation remains high. He predicts that the S&P 500 index will fall to 5000 points by October. Bannister warned that inflation will become a catalyst for further declines in the US stock market because it is "more sticky than expected by people."

It is worth noting that during the annual central bank meeting on August 23 this Friday in Jackson Hole, Wyoming, US Fed Chairman Powell will deliver an important speech that is highly anticipated around the world. In recent years, when Powell spoke at the Jackson Hole annual meeting, the US stock market often saw huge fluctuations. The option market currently prices that the rise or fall volatility of the S&P on Friday will exceed 1%.

Mooers, do you think the current US stock market rebound will continue?

In a volatile market, what is your trading strategy?

Let's discuss in the comments section!

Editor/Emily