Inside Markets — Easing Recession Fears

The SPX managed to close just above the post-payroll downside gap at 5447 yesterday with today’s improved retail-sales report and July-end earnings easing near-term recession fears. The soft-landing narrative is temporarily restored and September rate cut expectations fall to 25bp from 50bp. Bond markets reprice, but equity markets prefer policy normalization (smaller cuts), resilient growth and the potential for upside EPS estimate revisions. From a technical perspective, closing above the post-payroll gap may undo the short-term bearish trend but key short-term resistance lies just ahead at 5556. The path of least resistance seems higher given resilient growth, neutral positioning and progress on disinflation.