The Dow Jones Industrial Average continued to hit record highs on Tuesday, buoyed by strong results from UnitedHealth and growing confidence that the Federal Reserve will cut interest rates in September.
The blue-chip index Jones built on Monday’s momentum and rose 566 points, or 1.4 percent, to 40,782 in morning trading.
The Nasdaq was flat, while the S&P 500 rose 0.4%.
UnitedHealth Group Inc. surged 4.3 percent after reporting better-than-expected second-quarter profit, helping lift the blue-chip Dow Jones Industrial Average and the S&P 500 health care index to record highs.
Among other corporate earnings, Bank of America rose 3.6 percent on a strong net interest income outlook and better-than-expected second-quarter profit, helping to lift the S&P 500 financial stock index to a record high.
Morgan Stanley fell 1% after asset management revenue fell short of expectations, while Charles Schwab slid 7% after its net profit fell.
The Commerce Department reported that retail sales remained unchanged from expectations of a 0.3% decline in June, while retail sales excluding automobiles rose 0.4%, versus expectations of flat growth.
However, traders are fully pricing in a rate cut by September, with a 93% chance of a 25 basis point cut, according to CME’s FedWatch tool.
“Investors will have been initially disappointed that this may not be helpful in the Fed’s decision on rate cuts, but at the same time it provides some reassurance that the U.S. economy is not heading toward a recession anytime soon,” said Sam Stovall, chief investment strategist at CFRA Research.
“Momentum trading is likely to continue, especially with the US investor market seeing increased investment in small and mid-cap stocks.”
The Russell 2000 index of small-cap stocks rose 2%, to its highest since January 2022, as investors continued to move away from tech stocks, which have driven much of Wall Street’s gains this year.
Wall Street started the week strong on expectations that the Federal Reserve will cut interest rates in September and that presidential candidate Donald Trump will win a second term following an assassination attempt.
But Trump-related stocks fell after Monday’s gains, with Trump Media and Technology Group and software company Funware falling between 3% and 8%.
When Federal Reserve Chairman Jerome Powell said on Monday that the latest economic data “gives us some increased confidence” that inflation is on its way back to the central bank’s 2% target, markets took it as a dovish signal.
Among the major mega-cap stocks, Nvidia fell 1.6%, while Amazon rose 1%.
