Equities and bonds had a triumphant rebound in July, shrugging off a larger than expected inflation rate, along with another negative GDP report, all in the tick of earnings season.
The Consumer Price Index, which is the most common measure of inflation, rose 1.3% in June, and 9.1% over the last 12 months. The increase was broad-based, with the indices for gasoline, shelter, and food being the largest contributors.
The Federal Reserve announced another 75-basis point (0.75%) interest rate hike, which was aligned with expectations.
GDP had a second consecutive contraction in the second quarter, hitting one common definition of a recession. Markets reacted positively to the news, taking it as a sign that the Fed could slow or stop its rate hikes sooner than expected.
The market took a sigh of relief as many companies, particularly the tech giants, reported better than feared earnings. Almost 80% of the S&P 500 reported positive earnings results.
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