Dow, S&P 500 hit record as Wall Street rallies on rate cut bets
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.
Wall Street stocks rallied on Friday, with the S&P 500 and Industrial Average hitting record highs on optimism that the Federal Reserve will begin cutting U.S. interest rates in September, while big lenders fell after reporting mixed results.Some of the market's most valuable companies bounced back after dipping in the previous session, with Apple climbing 2% and Nvidia adding almost 3%.
JPMorgan Chase's second-quarter profit was lifted by rising investment banking fees. However, shares of the world's largest bank dipped almost 1%, cutting their gain in 2024 to about 21%.
Wells Fargo tumbled nearly 6% after the lender missed estimates for quarterly interest income, while Citigroup fell 2% despite reporting a surge in investment banking revenue.
The S&P 500 banks index lost 1%.
The small-cap Russell 2000 rallied for a third straight day, jumping 1.4% to its highest since 2022, while the S&P 400 Mid Cap index firmed 1.4%. The two indexes have lagged the S&P 500 this year.
"That rotation into small- and mid-caps is still continuing and that's a positive sign overall," said Ryan Detrick, chief market strategist at Carson Group.
With the S&P 500 at record highs, investors are betting on strong profit growth from companies beyond Nvidia and other heavyweights that have benefited from explosive growth in artificial intelligence computing.
Analysts expect second-quarter earnings for S&P 500 firms to jump 9.6%, with strong growth from technology companies but declining earnings in real estate, industrials and materials, LSEG IBES data showed.
"The thematic appeal of the AI story is still very much there," said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina. "We just need to see an inflection in earnings growth coming from the rest of the market, and that's something that we're going to be watching for quite intently over the next couple weeks."
The S&P 500 was up 1.18% at 5,650.38 points.
The gained 1.36% at 18,532.38 points, while the Dow Jones Industrial Average rose 1.15% to 40,209.36 points.
The most traded stock in the S&P 500 was Tesla, with $30 billion worth of shares exchanged during the session. The shares rose 3.65%.
Data showed producer prices were slightly hotter-than-expected in June but that did little to change bets on the first rate cut in September. The report follows data showing a surprise fall in U.S. consumer prices on Thursday.
Traders are betting on a 94% chance of a rate cut by September, up from 78% a week ago, according to CME Group's FedWatch.
All three major indexes were headed for weekly gains.
Advancing issues outnumbered falling ones within the S&P 500 by a 8.5-to-one ratio.
The S&P 500 posted 57 new highs and no new lows; the Nasdaq recorded 156 new highs and 28 new lows.
Source: Stocks-Markets-Economic Times
