The stock market’s nightmarish start to August seems like a distant memory. Since a 3% sell-off on Aug. 5 — fueled by recession fears and a 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 its record high set in July. “It’s painful … but ultimately, we view this as a growth scare. We don’t think the U.S. is entering a recession,” Tom Lee, head of research at Fundstrat, told CNBC’s “Squawk Box” in an interview Thursday. “But the market has shown a lot of resilience since then. The fact that we’ve bounced back so strongly shows how strong this market is.” .SPX mountain 2024-08-05 SPX as of Aug. 5 That said, there is one thing that could hurt stocks going forward: the Federal Reserve’s reliance on data. “A soft landing, the probability is increasing, and that’s why this is going to be a benign tapering cycle … which is good for the market. But I think the key is for the Fed to get away from the data dependence, because the data dependence is why they missed the inflation turning point,” Lee said. The Fed has repeatedly said for years that 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 interest rates too high and not easing sooner. The federal funds futures market shows traders expect rates to be cut by at least a quarter of a percentage point in September, according to 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 fall into recession — Lee sees even more upside for stocks. He favors cyclicals and small-cap stocks in that scenario. Investors will get more clues about the path of monetary policy on Friday, when Fed Chairman Jerome Powell speaks at a central bank symposium in Jackson Hole, Wyoming.