The stock market’s nightmarish start to August already feels like a distant memory. Since a 3% sell-off on Aug. 5 — sparked by recession fears and the reversal of a popular trade tied to the Japanese yen — the S & P 500 has surged 8.4%. That move puts the benchmark less than 1% below a record high set in July. “It was gut-wrenching, … but we viewed this, ultimately, as being a growth scare. We didn’t think the U.S. was entering recession,” Tom Lee, Fundstrat’s head of research, told CNBC’s ” Squawk Box ” in an interview. “But the market showed a lot of resilience since then. The fact that we snapped back so strongly shows how strong this market is.” .SPX mountain 2024-08-05 SPX since Aug. 5 That said, there’s something that could hurt stocks going forward: the Federal Reserve’s data dependence. “A soft landing, the probabilities are going up, and that’s why this should be a benign cutting cycle … good for markets. But I think the key is the Fed getting off data dependence, because data dependence is the reason they missed the inflation turn,” Lee said. The Fed has for years reiterated it will set monetary policy based on what inflation and labor market data show. But the central bank has been criticized over the past year for keeping rates too high and not easing sooner. The fed funds futures markets shows traders expect rates to come down by at least a quarter percentage point in September, according to the CME Group’s FedWatch tool. If the Fed manages to cut rates and achieve a soft landing — a scenario in which growth slows but the economy doesn’t tip into a recession — Lee sees even more gains ahead for stocks. Under this scenario, he likes cyclical and small-cap stocks. Investors will get further clues on the path of monetary policy Friday, when Fed Chair Jerome Powell delivers a speech at a central bank symposium in Jackson Hole, Wyoming.