Russia’s economy contracts sharply as war and sanctions take hold.

The stock market is poised for its best gain of the year, as inflation eases and early signs that the economy is stabilizing comfort investors.

The S&P 500 rose On Friday, the index put itself on track for its fourth consecutive positive week, which it has not achieved since October. The index is now about 15 percent higher than its low point in June, although it remains down more than 10 percent for the year.

The rally is in stark contrast to the first half of the year, when Wall Street took a hit. Worst start in half a centuryThe war in Ukraine, rising energy costs, rising interest rates and rapid inflation have fueled investor fears about the health of the economy.

Federal Reserve officials have suggested that their drive to raise interest rates to bring inflation under control is far from over. But some investors see recent economic data as support for the central bank Move less aggressivelyAlleviating concerns that higher borrowing costs could push the economy into a deep recession.

“The peak of panic about inflation and interest rates is over and we’re looking at something that’s not as dramatic,” said Michael Purves, founder and chief executive of Tollbakan Capital.

The latest Consumer Price Index report released on Wednesday gave Wall Street a moment of relief as inflation. fell to 8.5 percent For the year to July, that’s down from 9.1 percent in the previous month. The data gave early indications that the Fed’s efforts to reduce inflation may be bearing fruit.

What’s more, data shows that the economy in July All lost jobs regained In epidemics, A week of better-than-expected earnings reports from companies eased some concerns among investors that higher rates, which raise costs for companies, could lead to deeper cuts in corporate America.

Also called the CBOE Vix Volatility Index Wall Street’s “Fear Gauge” Because it reflects investors’ sense of uncertainty over stock market movements, this week is below the long-term average of 20 points. The Wix has remained above that mark since April, so a lower reading could be a sign that investors’ concerns about another low have eased.

“We’ve seen a succession of inflationary pressures starting to build,” said Patrick Palfrey, senior US equity strategist at Credit Suisse, which is forcing investors to reassess their trading positions.

Bankers said retail investors have helped drive the rally. A sharp rise in so-called meme stocks and a surge in some cryptocurrencies also point to greater participation by individual investors.

“The cornerstone of this is the labor market and it’s rock solid,” said James Macerio, Americas co-head of equities at Société Générale. “You don’t buy meme stocks if you don’t have a job.”

Experts also said that the stock market was primed for a ratcheting high. Investors pulled back their bets on the market due to uncertainty. Trading volume is also light as many big investors take vacations till August. As a result, even small amounts of buying interest have helped lift the market, accelerating the chase for returns by other investors.

More than $11 billion flowed into funds buying U.S. stocks in the week through Wednesday, the most in eight weeks, according to EPFR Global.

But some warned that they could unstock as quickly as the market recovers. Short-term gains are not uncommon during periods of long losses, known as bear market rallies.

After the S&P 500 peaked in October 2007, it fell more than 50 percent by November 2008 following the collapse of Lehman Brothers. After that, the index rose by almost 24 percent in a few weeks. But the sale is not over. The S&P 500 gave up all those gains in early 2009, before bottoming out in March of that year.

Mr. Masserio said the Fed’s task of reducing inflation to its 2 percent target was like moving an oil tanker: slow and fraught with risk.

“Fundamentally, what’s built into the system is much more difficult than what we can fix in six months of a monetary policy change,” he said, adding that the stock market’s woes are far from over.

Shares are higher as the inflation outlook has improved and the economic backdrop is supportive. Although not as low as expected, there are doubts about how long the rally will last.

“I’m bullish on the market but still a nervous and anxious bull,” Mr Purves said. “We’re not out of the woods yet.”

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