Stock trader Peter Tuchman, left, works on the trading floor of the New York Stock Exchange.
Spencer Platt | Getty Images
The Dow Jones Industrial Average reached new highs on Tuesday as the market rally extended beyond just big tech companies.
The Dow rose 580 points, or 1.5%, to a new intraday record. S&P 500 0.4% added, while the Nasdaq Composite decreased by 0.1%.
bank of america And Morgan Stanley jumped more than 4% and 1% respectively after profits topped analysts’ forecasts. They are the latest household names to report quarterly results as the new reporting season gets underway.
Investors also continued to rotate from mega-cap technology, which has posted monster gains amid optimism around artificial intelligence, into small-cap stocks. Russel 2000 rose nearly 2% and was on track for its fifth straight day of gains, while the tech-heavy Nasdaq fell. Notably, AI darling Nvidia slid around 2%, while Tesla And Microsoft each fell by almost 1%.
“There’s a lot of momentum behind this rotation trade from big-cap tech into small caps and into the average stocks,” said Ross Mayfield, investment strategist at Baird. “It’s a rotation, but it’s much more about the upside in the more cyclical sectors of the market than it is a referendum on the long-term potential of AI.”
Retail data stronger than expected
Retail sales were also better than expected, which could ease concerns that consumers would succumb. June sales were unchanged, while economists polled by Dow Jones had forecast a 0.4% decline. Excluding autos, sales rose 0.4%, a bigger gain than the consensus forecast of 0.1%.
That could offer hope that the Federal Reserve will cut interest rates without a substantial weakening of the economy, said Quincy Krosby, chief global strategist for LPL Financial. Traders now see a 100% chance of a decline in borrowing costs in September, according to the CME FedWatch tool.
This data “should be positive for markets,” Krosby said. “Investors favor the launch of a Fed easing cycle to start with a still solid economic backdrop.”