Gerry Sparrow

Stocks rallied to start the week on earnings optimism before losing momentum over rising bond yields, as the 10-year Treasury yield moved above 4.9% for the first time since 2007.

Stocks exhibited remarkable resilience in the face of a surprise attack on Israel and hotter inflation data than investors expected. Stock prices initially buckled on the breakout of hostilities in the Middle East.

A stronger-than-forecast retail sales report and a modest increase in core producer prices initially lifted sentiment, but consumer confidence and semiconductor news soon dented Thursday's optimism.

The labor market has exhibited remarkable resilience, but last week's employment data showed a cooling trend

Stocks retreated on Monday after a strong rally the previous day, driven by a credit downgrade of a few banks and weak retail earnings. Despite this, stocks resumed their upward trend on Wednesday following the release of positive economic data.

Rising bond yields weighed on stocks throughout the week, as economic data pointed toward a potential need for further rate hikes. China's flailing economic recovery and warnings of potential bank downgrades added to the market's woes.

As the Federal Reserve evaluates its next move on short-term interest rates, it's essential to consider the recent shift in wage growth and inflation.

The market's recent bounce may be a sign that the recession narrative has been put on hold, at least for now.

The recent drop in inflation was a significant event, with the core CPI rising just 0.16 percent, the lowest reading in more than two years.

The economy is slipping into an expansion rather than moving toward a recession, with the first quarter gross domestic product expanding at a 2% rate and the job market appearing in good shape.

Home builders' confidence edged into positive territory for the first time in 11 months, aided by strong demand, low inventory, and a recovering supply chain.