Federal Reserve Chair Jerome Powell’s optimistic comments about the U.S. economy on Wednesday added to a debate among investors about whether stocks have reached a bear-market bottom. On the one hand, Thursday’s report on the health of the American economy, prompted an even more confusing discourse on where things actually stand when it comes to a recession.
Second-quarter GDP data, which showed the U.S. economy shrank by 0.9% on an annualized basis in the three-month period from April through June, intensified fears that the economy might already have slipped into recession. See: Is the U.S. in recession now? Not yet — and here’s why On the other hand, the S&P 500
officially entered bear-market territory in mid-June, and cemented its worst first-half performance since 1970, signs that many investors have been pricing in an economic downturn. Adding to the malaise was the June consumer-price index that came in especially hot at 9.1%, a 41-year high. It was followed Friday by the release of the Fed’s preferred monthly inflation gauge, the personal-consumption price index, which provides no reprieve from price pressures at a four-decade high. But a view that the Fed might need to “pivot” and back away from its full slate of planned rate hikes though 2023, if the economic picture worsens, has been gaining steam on Wall Street, helping major stock benchmarks in July to book their best month in nearly two years. Strong performance for stocks and other parts of credit markets in July have led to a torrent of viewpoints heading into August, telling investors why that strategy looks flawed, or not. “When looking at moving averages at the stock level in the S&P 500, it would suggest we are not …