The Dow Jones Industrial Average hit a record high on Friday, as stocks that had been struggling this year rallied on optimism that the Federal Reserve will begin easing monetary policy in September, while big banks fell after mixed earnings reports.
The Dow Jones Industrial Average rose 338.69 points, or 0.8%, to 40,092.44, beating its previous intraday record of 40,077.40 set in late May. The S&P 500 rose 0.9% and the Nasdaq added 1.1%.
JPMorgan Chase & Co.’s second-quarter profit rose on higher investment banking fees, but shares in the world’s largest bank fell 0.1% after rising 21.4% this year.
Wells Fargo slid 6.8 percent after quarterly interest income fell short of expectations, while Citigroup slid 1.7 percent despite a surge in investment banking income.
“Bank results were a mixed start to earnings season, but buyers are still coming in,” said Ryan Detrick, chief market strategist at Carson Group. “The shift toward small- and mid-cap stocks is still continuing, which is a positive sign overall.”
With the S&P 500 and Nasdaq hovering near all-time highs, investors are hoping to see strong profit growth from companies outside of tech giants like Nvidia to extend the rally in U.S. stocks.
Analysts expect second-quarter profits for S&P 500 companies to rise 9.6% in 2023, up from a 2.8% decline in the same period in 2023, according to LSEG IBES data.
“With the Fed now clearly more dovish than it has been in the past, we could see a handover of investment to less popular, less valued and less performing small and mid-cap stocks later this year,” Detrick said.
The data showed producer prices rose slightly more than expected in June but there was little change in expectations that the first rate cut will come in September. The report came after data showed U.S. consumer prices unexpectedly fell on Thursday.
According to CME Group’s FedWatch, traders now see a 94.4% chance of a rate cut by September, up from 77.7% a week ago.
All three major indexes were trending higher on a weekly basis, with the Dow Jones Industrial Average hitting its highest level in nine weeks.
Large-cap stocks were mixed in trading, with Apple Inc. rising 1.9% and Meta Platforms Inc. dropping 1.3%.
Tesla shares rose 3.5% after falling more than 8% on Thursday following reports that the launch of its robotaxi car would be delayed.
