The S&P 500 and Nasdaq 100 indices notched their seventh consecutive day of gains on Friday, culminating in their strongest weekly performance since late October 2023 as investor sentiment toward risk assets improved in response to a string of upbeat economic indicators released throughout the week.

Tracking these indices, the SPDR S&P 500 ETF Trust (NYSE:SPY) and the Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) closed with modest daily gains of 0.2% and 0.1%, respectively. For the week, the S&P 500 and Nasdaq 100 soared 4% and 5.5%, marking their best weekly performances in 10 months.

The Dow Jones Index, as tracked by the SPDR Dow Jones Industrial Average ETF (NYSE:DIA), closed 0.2% higher, marking its fourth straight session of gains and the best week since December 2023.

Wall Street Extends Winning Streak On Bullish Economic Data, Record-High Earnings

On Friday, traders welcomed a better-than-expected consumer sentiment reading from the University of Michigan, which signaled growing optimism among consumers.

A day earlier, initial jobless claims for the week ending Aug. 10 surprised to the downside, indicating fewer concerns about the resilience of the labor market, while retail sales spiked more than expected by 1% on a month-over-month basis in July, marking the strongest month since January 2023.

Softer-than-anticipated inflation data for both consumers and producers released earlier this week further fueled market enthusiasm, cementing expectations for an interest rate cut from the Federal Reserve next month.

The upbeat data has tempered bets on a larger rate reduction, with market participants now leaning toward a more modest 25-basis-point cut. Market-implied probabilities for a larger 50-basis-point reduction have tumbled to 23%, according to CME Group's FedWatch tool, as economic data signals no rush for an overly loose monetary policy.

"The latest data support our view that betting against consumers when jobs are expanding is a bad bet. Even bad weather didn't stop them from going to the malls last month," said Ed Yardeni, president at Yardeni Research.

The latest earnings season provides no indication of an impending recession, Yardeni said. With over 90% of S&P 500 companies having reported second-quarter results, collective operating earnings per share for the index surged 10.9% year-over-year to a record high of $60.19.

S&P 500's Top 5 Movers On Friday

Nasdaq 100's Top 5 Movers On Friday

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Photo generated using artificial intelligence via MidJourney.