Economic contraction for two consecutive quarters due to high inflation and aggressive policy tightening make many analysts believe that a recession is unavoidable. However, better-than-expected corporate earnings and an expansion of the services sector at an accelerated rate in July are expected to offset the impact of fears over a potential recession on the market.
The sector's activity, which accounts for 80% of GDP growth, expanded in July for the 26th month in a row. The stock market responded positively to the favorable economic data. The S&P 500 jumped 1.6%, while the Dow Jones Industrial Average and tech-heavy Nasdaq Composite gained 1.3% and 2.6%, respectively.
