On a cable news gabfest last Sunday, I actually heard a politician compare current economic conditions in the U.S. to the stagflation experienced during the Jimmy Carter era. I almost did a spit-take with my coffee. That argument is ridiculous on its face.

My Greek grandmother sometimes used an expression from her village in the old country: The dogs bark, but the caravan moves on.

My Yia Yia was a wise woman. And today, while the naysayers bark, the stock market moves on.

The S&P 500 closed out July with a gain of 2.9% and has climbed for five consecutive months. The index has racked-up its fifth positive month in a row, and stands only 5% off its record high reached in January 2022. The index also has generated its largest five-month percentage gain since June 2021.

Falling inflation and resilient economic growth are fueling expectations for a soft landing, which in turn has been driving stocks higher. Wall Street is increasingly confident that the Federal Reserve’s interest rate hiking campaign will soon end. The betting currently expects a rate cut in March 2024.

The holy grail: within reach…

The path to avoiding a recession has gotten wider. Fed Chair Jerome Powell, at his presser last Wednesday, said of his central bank colleagues:

“The staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession.”

The consensus of economists has shifted in the same sanguine direction, with an increasing number of experts saying we’ll probably avoid a recession. That’s a remarkable turn of events. When the Fed is in inflation fighting mode, the phenomenon of a soft landing is something akin to grasping the holy grail.

Crude oil prices have risen above $80 per barrel for a gain of 14% in July, crude’s best monthly performance in a year. Crude’s resurgence indicates tighter supply but it’s also a harbinger of economic optimism. Despite the inroads made by renewables, the world remains heavily dependent on fossil fuels and economic growth drives energy demand.

WATCH THIS VIDEO: The Running of The Bulls

Second-quarter 2023 U.S. gross domestic product (GDP) surprised to the upside, the Fed’s preferred gauge of inflation cooled further, and jobless claims have declined. Due to falling inflation, most American workers now have higher real wages than they did before the COVID pandemic.

What’s more, corporate earnings are coming in better than expected. In aggregate, companies are reporting earnings that are 5.9% above expectations, according to FactSet. The consumer discretionary (+13.9%) sector is reporting the largest positive aggregate difference between actual earnings and estimated earnings.

The information technology (+9.1%) sector is reporting the second-largest positive aggregate difference between actual earnings and estimated earnings. A notable earnings surprise was posted by chipmaker Intel (NSDQ: INTC), which is rebounding from its recent woes.

After closing out last week in positive territory, the main U.S. stock market indices extended their gains Monday. On Tuesday, the indices closed mixed as follows:

• DJIA: +71.15%
• S&P 500: -12.23%
• NASDAQ: -62.11%
• Russell 2000: -9.01%

The stock market rally is broadening. The Dow Jones Industrial Average’s resurgence in recent days reflects increasing economic strength. What’s more, as the following chart shows, the sharp rise of the New York Stock Exchange Advance/Decline line (NYAD) indicates that the upward trajectory of equities isn’t just about mega-cap tech stocks and artificial intelligence:

When NYAD is rising, the stock market is in a strong position because more stocks are rising than falling. Investors earlier this year expressed concern that the rally was too narrow and disproportionately reliant on Silicon Valley household names, but you can’t make that argument anymore. It’s a particularly healthy sign that small-cap stocks have joined the party.

Meanwhile, the CBOE Volatility Index (VIX) has sharply fallen year to date and hovers below 14. A reading below the threshold of 20 reflects less fear and stress in the market.

The era of Jimmy Carter? Hardly. Indeed, as inflation falls, we’re witnessing the beginnings of a secular bull market. It’s time to scoop up the growth stocks on your wish list, while their valuations remain reasonable.

However, if you’re more of an income investor, I suggest you consider our premium trading service, Rapier’s Income Accelerator, helmed by our income expert Robert Rapier.

Robert Rapier can show you how to squeeze up to 18 times more income out of dividend stocks, with just a few minutes of “work” each week. Click here for details.

John Persinos is the editorial director of Investing Daily.

To subscribe to John’s video channel, click this icon: