This is CNBC Senior Markets Commentator Mike Santoli’s daily blog with insights into market trends, stocks and statistics. A breakfast of benign economic and earnings data, along with easily digestible Fedspeak, is fueling a relief rally in equities, with “better than feared” entries slightly easing recession worries, earnings pain and the aggressiveness of the Federal Reserve. The market has been unwilling to loop back to June lows, though it remains mired in the low end of the 2022 range. On nine of the past 11 trading days, the S&P 500 has finished well below above its morning low, due to low equity exposures (and low expectations) from professional investors, and some relief from bond and commodity markets. Still carving out a sideways range, plausibly settling into some sort of bottoming setup, but it’s hard to get much conviction on that prospect. Breaking above 4,000 in a broad burst of buying energy remains a next step for the bulls to regain some benefit of the doubt. A healthy pace on nominal retail sales, better Empire State Manufacturing (with cooler inflation indicators), and a modest beat on the University of Michigan Consumer Sentiment Report and its Consumer Expectations component. inflation helped to place supply in the market. Other bank CEOs also commented that activity and consumer/business credit indicators are “good for now,” although they could get a bit worse. St. Louis Fed President Jim Bullard and Atlanta Fed President Raphael Bostic hinted at a 0.75 percentage point rate hike the following week without pushing for a point. full percentage, although there is still some play in those prospects. The overemphasis on UMich inflation expectations – an unreliable survey of a few hundred people – may seem like a reach for traders, but Fed Chairman Jerome Powell himself provoked it by quoting last month’s first reading of this survey as a cover story. for the 0.75 percentage point rise in June. The survey appears to mostly track gas prices and political sentiment, but it has become at least a MacGuffin propelling Fed plot. The bulls’ hope remains that earnings and guidance are ‘better than feared’, valuations have adjusted somewhat to a weaker outlook and the recession talk is mostly about investors who are over-expecting. a slowdown based on market signals and Fed body language rather than clear leading indicators. It bears recalling that there was a fairly entrenched recession camp in both 2011 and early 2016, proving the false alarms. Yes, it’s quite different in the details now: the market is trying to time the inflection point of the cycle and a central bank dovish shift, and the Fed is demanding (for now) months of real data proving that inflation was really shot down. But the path of inflation and the Fed’s guidance can change quickly, as the past eight months have shown, so the market will continue to try to play a possible trick. CEOs and economists who say consumers are in good shape and with a good balance sheet are not watering it down. The ratio of household financial obligations (debt service plus rent/mortgage payments) to disposable income is quite low, in stark contrast to periods before past recessions. The S&P 500 is spending a lot of time near the 3,850 level, as it did earlier in the week. This is another option expiry day, when sometimes round numbers exert gravity. It is also the threshold representing 20% below the records. Credit is firming today on better economic signals and the 2-year Treasury yield at 3.1% is well below Thursday’s peak near 3.25% as macro stress eases slightly on both fronts. Good market spread: volume up 85% on NYSE. VIX down 2 and slipping below 25 ahead of a summer weekend. Bottom of the three-month range. Not low enough to talk about expected stability, but it also proves that everyone who insisted that VIX “should be higher” near market lows wasn’t quite right.