Stocks hit its lowest point on an intraday basis since mid-July on Friday as inflation fears intensified. Growth stocks fared worst, with the Nasdaq Composite falling nearly 5.5%.

The S&P 500 gained 3.6% over holiday-shortened week, lifting $SPX above 50 days & 100 days moving averages, triggering short coverings.

In a week of mostly light summer trading, stocks pulled back sharply as investors became less optimistic that the Fed will be able to tame inflation without causing a significant economic slowdown.

US equity markets gave back a portion of the previous week’s strong gains after Saint Louis Fed’s President James Bullard appeared to dampen hopes that inflationary pressures had peaked.

US equities rallied after data showed signs that US consumer prices, while still elevated, had started to slow, supporting the view that inflation might have peaked.

US stocks posted solid gains despite another 75-basis-point rate hike from the Fed and news that the US economy contracted at a 0.9% annual rate in the second quarter.

Investors appeared to welcome signs of a slowing economy and fading inflationary pressures. Indeed, disappointing US Macro data (PMIs, initial jobless claims, Housing data, Philly Fed leading indicators) drove US rate hikes expectations lower, pushing bond yields and the dollar downward and main stocks indices higher.

Stocks remained volatile in light summer trading, as investors absorbed inflation data and the start of Q2 earnings season.

The main US equity indices erased much of the previous week’s losses on optimism that the Fed will be able to curb inflation without tipping the economy into a recession.

The S&P 500 Index closed out its worst first half of the year since 1970.