#USA #stocks were mixed on Tuesday, with the Dow Jones Industrial Average building on Monday’s all-time closing high after solid retail sales data bolstered expectations that the U.S. Federal Reserve is close to easing interest rates.
The S&P 500 also rose, but mega-cap growth stocks, led by Nvidia Corp (NASDAQ) and Microsoft Corp (NASDAQ), pulled the tech-heavy Nasdaq lower.
Economically sensitive small caps extended their rally. The Russell 2000 scored a fifth straight day of gains greater than 1%, its longest winning streak since April 2000. The index was last up 2.9%, touching its highest level since January 2022.
Dow transportation stocks also outperformed the broader indexes as investors increasingly focused on undervalued areas of the market.
Value stocks, which have underperformed their growth peers and the broader S&P 500 so far this year, jumped 1.3%.
“This rotation underscores the likelihood of interest rate cuts as early as September,” said Greg Bassuk, CEO at AXS Investments in New York. “Small cap companies are among the best-positioned to benefit from rate cuts, and today we’re seeing this trifecta of strong earnings, a resilient economy and high confidence of a rate cut in September.”
Economic data on Tuesday included stronger-than-expected retail sales reported by the Commerce Department. This provided reassurance that consumers, responsible for about 70% of U.S. gross domestic product, have stayed resilient despite restrictive monetary policy, and eased fears that high interest rates could tip the economy into recession.
“We are in a Goldilocks environment right now, with inflation dropping, the economy continuing to perform well, and slightly better-than-expected corporate earnings,” said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York.
Second-quarter earnings season is ramping up.
UnitedHealth Group (NYSE) jumped 5.9% after reporting consensus-topping profit, lifting the blue-chip Dow and the S&P 500 Health Care index to all-time highs.
Bank of America’s second-quarter profit beat expectations, and underwriting fees rose as capital markets resurged. The second-largest U.S. bank also provided upbeat net interest income guidance, sending its shares up 5.7%.
Morgan Stanley rose 1.1% even after the investment bank posted disappointing wealth management revenue.
Charles Schwab (NYSE) slid 8.6% after reporting a dip in interest income.
At 2:14 p.m. ET, the Dow Jones Industrial Average rose 664.62 points, or 1.65%, to 40,876.34, the S&P 500 gained 19.29 points, or 0.34%, to 5,650.51 and the Nasdaq Composite dropped 40.90 points, or 0.22%, to 18,431.67.
Of the 11 major sectors in the S&P 500, industrials enjoyed the largest percentage gains, while technology and communication services were the only two in negative territory.
Tinder parent Match jumped 7.8% on news that activist investor Starboard has a stake of over 6.5% in the company.
Interactive Brokers (NASDAQ) and J.B. Hunt Transport Services were among those due to post earnings after the bell.
Advancing issues outnumbered decliners on the NYSE by a 3.90-to-1 ratio; on Nasdaq, a 2.91-to-1 ratio favored advancers.
The S&P 500 posted 88 new 52-week highs and three new lows; the Nasdaq Composite recorded 277 new highs and 28 new lows.
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