Stock markets rally, S&P 500 reaches fourth consecutive week of gains

Despite a flood of discourse surrounding inflation and a possible recession in the US, the S&P 500 is now more than 8% above its 50-day moving average, representing the widest spread since September of 2020. The S&P has moved roughly 500 points, or 13%, in just under a month, a rally that some say suggests an ease in inflation and potentially improving sentiments. But some market experts point to possible panic buying as a reason for the boost.

Marko Kolanovic from JP Morgan said there are growing signs that inflation is behind us, which “reinforces the idea that Fed hawkishness is likely behind and a soft landing is increasingly likely.”

Some traders suspect that the market rally may have less to do with stabilization and improved sentiments and more to do with an increase in panic buying. Many traders who veered heavily into cash between April and July this year are returning to the market.    

“With the market moving up and many people still under-positioned, you’re going to have a lot of people chasing stocks,” said Chris Murphy, Co-Head of Derivative Strategy at Susquehanna.   

Fears that the rising market wouldn’t last were echoed by Kolanovic, who noted that “The bounce has not been backed by fundamentals, which deteriorated heavily last month.”

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