From ICU to KTV! In just two weeks, the market has become "extremely optimistic" about the US stock market

The sharp drop in early August is still fresh in memory, but in just two weeks, the US stock market has seen a strong rebound, with market sentiment suddenly turning warm.

Last night, the S&P and Nasdaq achieved an 8-day consecutive rise for the first time this year. Since August 8th, the Nasdaq has risen by over 10%, marking its longest upward trend since November 2023, while the S&P has risen nearly 8% in eight days, the best performance since March 2003.

Mandy Xu, Director of Global Market Derivatives Market Intelligence at the Chicago Options Exchange, said, "The US stock market seems to have fully recovered in just two weeks."

The vast majority expect the US economy to achieve a "soft landing"

According to data from Deutsche Bank, a large amount of funds have flowed into index options, large-cap tech stocks, cyclical stocks, and defensive stocks, which are typically seen as investment targets during market recovery.

Trend-following investment portfolios, including "volatility control" funds, have also significantly increased their stock exposure. These funds buy in calm markets and sell in turbulent markets to reduce losses. Although their positions are still below historical highs, their stock holdings have increased significantly.

A series of strong US economic data has eased concerns about an economic slowdown. Neil Shearing, Chief Economist at Capital Economics, said, "Even the most bearish individuals are finding it hard to find much evidence in the plethora of data released in the past week to support recent recession concerns."

Federal funds futures indicate that investors expect the Fed to cut interest rates four times by the end of the year, by 25 basis points each time. Mary Daly, President of the San Francisco Fed and a 2024 voting member, also stated on the 18th that the Fed is considering gradually and cautiously easing monetary policy.

A survey by Bank of America shows that credit investors are optimistic about the economic outlook, with three-quarters of respondents expecting inflation to slow down without causing an economic recession. The vast majority expect the US economy to achieve a "soft landing."

Bank of America points out that the recent market turbulence has actually strengthened investors' confidence in a "Goldilocks" macroeconomic environment, indicating that economic performance will remain moderate and stable, without overheating or falling into recession