Dow hits all-time high in broader market rally on rate cut hopes
The Dow has underperformed the S&P 500 and Nasdaq in 2024, rising only 6.4%. Tech and semiconductor stocks have led market gains, while value stocks within the Dow have struggled. Despite a weak start to the earnings season and bank stocks falling, Wall Street indices have still advanced.
The Industrial Average scaled an intraday record high on Friday, playing catch-up with two other main U.S. indexes in recent broad-based market gains.Dow broke above 40,000 points to set a new record as traders increasingly expect the US Federal Reserve to cut interest rates. The blue-chip 30-stock index was up 0.9% at 40,094.54 points, surpassing its previous intraday all-time high of 40,077.40 points hit in late May.
So far this year, the Dow has risen 6.4%, underperforming the broader S&P 500 and the tech-heavy Composite, which have advanced 18.2% and 23.1%, respectively, over the same period.
Growth stocks, powered by technology and semiconductors, have led the market higher in 2024, while the more value-oriented Dow has struggled to keep up.
Wall Street's main indices advanced despite a lacklustre start of the earnings season, with bank shares taking a hit despite beating forecasts.
Shares in Wells Fargo tanked around 7 percent as its retail banking activities flagged and its costs rose more than its revenue.
Shares in JPMorgan Chase, the biggest US bank by assets, fell by 2.6 percent before cutting losses after it reported higher costs for bad loans.
Citigroup shares fell as much as 3.6 percent.
"The question for investors now is whether this sell-off is part of the rotation out of the higher performing stocks towards value investing, or is there something within these results that are unsettling investors," noted Kathleen Brooks, research director at XTB brokerage.
She noted that both JPMorgan Chase and Citigroup shares are up by around one-fifth since the start of the year.
Meanwhile, data showed US wholesale prices picked up more than expected in June on the back of higher services costs, unwelcome news for monetary policymakers.
A smaller-than-expected US print on the June consumer price index Thursday ramped up bets on easing borrowing costs on the horizon in the world's biggest economy, with investors increasingly pricing in a rate cut in September.
Earlier this week US Federal Reserve Chairman Jerome Powell indicated that the central bank did not need to wait for inflation to fall to its 2.0 percent target to begin lowering interest rates.
"Despite US producer prices coming in hotter-than-expected, most European and US stock indices ended the week on a positive note as investors are convinced a September Fed rate cut is on the cards," said Axel Rudolph, senior market analyst at online trading platform IG.
The S&P 500 was also sitting just below its record high in late morning trading.
Source: Stocks-Markets-Economic Times
