Markets have bounced back with a vengeance over the past week, with the S&P 500 up more than 6.5% and the Nasdaq soaring over 8% since the August 5th dip.
What’s behind the rally? Two things: inflation is cooling down, and the economy is holding its own, making everyone feel they can breathe a bit easier.
The Michigan Consumer Sentiment Index reported an improvement in August, its first increase in five months.
The topline sentiment index is up to 67.8 (from 66.4 in July), with the expectation index rising to 71.1 from 68.8, the highest since April.
A University of Michigan survey showed that one-year inflation expectations held steady at 2.9% in August, with the five-year outlook remaining at 3.0% for the fifth consecutive month.
Plus, expectations for personal finances and the five-year economic outlook reached their highest level in four months.
This data all points to a U.S. consumer that is still spending and remains relatively optimistic about the future.
Retail sales also grew by 1% — more than doubling the expected 0.4% — with autos leading the charge.
In other good news, auto loan rates have also dipped slightly in Q1 2024, with new vehicle loans averaging 6.73% and used vehicle loans at 11.91%.
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