Stock market: S&P 500, Nasdaq on track for 4th week of gains

Yahoo Finance Live anchors discuss new inflation data and why the stock market is on track for its fourth straight week of gains.

Video transcript

BRIAN SOZZI: And now, here are three things you need to know right at this moment. Markets trying to claw their way out of this bear market after new inflation data shows we may have gone over the hump. The stock market is on track for its fourth straight week of gains. This, as Bank of America says investors are returning to stocks and bonds in masse with global equity funds pulling in over $7 billion this week alone.

And Brad, one of the hottest trades has been the tech space. And this note by the Bank of America team saying, be careful a little bit. Because we've seen so much money pour back into big cap tech, Apple, you name it, some of these stocks may now be overvalued relative to a realistic assumption of where this economy is.

BRAD SMITH: Yeah, and you mentioned the style factors here, that they're looking across US large cap. They're also seeing small cap in value, seeing additions as well. And then consumer and technology, that's huge. When you think about the state of not just the tech play right now and where some of the investors may be nibbling at opportunities at least over a three year, perhaps, time horizon, that's exactly where some of that tech play starts to come back into focus.

And then, additionally, on the consumer side, because you had seen discretionary be so battered over the course of this lower move that we've seen over the course of this year and the entry into the bear market, now even if we get a reemergence out of a bear market, the big question is, where is the consumer actually going to lead growth? Even though growth prospects for many companies right now, still up in the air.

BRIAN SOZZI: Yeah, we're gonna find out next week a lot of those retail earnings. But I do want to caution, this is summer.

BRAD SMITH: Yeah.

BRIAN SOZZI: It's August. The whales, the rich folks are out there on their yachts trading stocks or maybe not trading as much as they would like to. We're still seeing some wild moves in these meme stocks. Look, you go on to the Yahoo Finance page, and the most active ticker pages here at Yahoo Finance, it's AMC, it's Bed Bath & Beyond, it's a GameStop, again those challenged, fundamental companies are seeing a lot of action here in this low volatility or just low volume market.

BRAD SMITH: And also think about why this move is taking place, too, most recently. And it's really on this idea that the Fed is not going to be as aggressive as they could potentially be here. And that's especially off of some of the economic data that we've seen come forward this week on the CPI and PPI front.

But then additionally, commentary from San Francisco Federal Reserve Bank President Mary Daly. And essentially saying and signaling that a 1/2% point interest right-- interest rate hike in September, it makes sense which still opens the possibility of a slightly higher one, perhaps 75 basis points there.

BRIAN SOZZI: Well, the last thing the Fed-- any Fed member wants to do right now is dial back or I think fuel this market rally by saying, you know what? Maybe we'll only raise rates by 25 basis points at our next meeting. So you're seeing a lot of Fed officials just stay firm in that 50 basis points, as they should. I know this market has loved to see, this week, some signs of peak inflation. But inflation, what, CPI over 8 and 1/2% this week year-over-year? That is well below-- or well above their 2% target. They have a long way to go to bring down inflation.

BRAD SMITH: Absolutely