S&P 500 and Dow Jones Industrial Average Fall as Stocks Take a Breather From Recent Rebound

Stocks traded mostly lower Friday morning as markets took a break from a multiday rebound that they saw earlier this week following their big Aug. 2-5 sell-off.

The key indexes had been mostly rising in recent days on a combination of tame U.S. inflation data and decent signs of economic growth, including better-than-expected results of July retail sales and the latest weekly initial jobless claims.

That eased fears of either a U.S. recession or continued high U.S. inflation. All in, the benign recent numbers seem to leave the door open for the Federal Reserve to cut interest rates next month for the first time since 2020.

Lower interest rates historically help stocks by making bond and money-market yields less attractive to investors.

However, Wall Street saw a significant sell-off Aug. 2-5 after a weaker July jobs report raised fears that higher interest rates had not only curbed high U.S. inflation, but overshot their target and pushed the economy toward a recession.

Still, stocks recouped their Aug. 2-5 losses as newer data seemingly reassured investors that the economy remains on a decent footing.