Recent economic data has eased the recession fears that loomed earlier in August, diminishing the likelihood of large rate cuts by the Federal Reserve and boosting investor confidence in risk assets.

The S&P 500 and Nasdaq 100 indices saw their strongest week since late October 2023 as of Friday midday trading, driven by encouraging economic releases during the week.

Inflation continues to decelerate. In July, the Consumer Price Index inflation gauge increased by 2.9% year-over-year — the slowest pace since March 2021 and below both the previous month's rate and the expected 3%. Core inflation, which excludes food and energy prices, edged down from 3.3% to 3.2%, matching analyst expectations.

Initial jobless claims rose less than anticipated for the second straight week, suggesting the uptick in unemployment in July may have been a temporary blip rather than a sign of a broader cooling labor market trend.

Moreover, retail sales surged by 1% in July, marking the strongest monthly growth since January 2023 and significantly surpassing expectations. Consumer confidence also exceeded forecasts in August, further strengthening the economic outlook.

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