US: Dow, S&P 500 end at fresh records on bullish earnings reaction
THE Dow surged to another record on Tuesday on bullish reaction to positive earnings reports amid optimism over the rising likelihood of US interest rate cuts.
The blue-chip index piled on 1.9 per cent or more than 740 points to finish at 40,954.48, posting a second straight record.
The broad-based S&P 500 gained 0.6 per cent to 5,667,.20, also a record, while the tech-rich Nasdaq Composite Index advanced 0.2 per cent to 18,509.34.
The records were driven partly by outsized gains for Bank of America and Dow member UnitedHealth Group following earnings reports, as well as an ongoing rotation of funds towards smaller companies that have underperformed in 2024 but are expected to be boosted by Federal Reserve interest rate cuts.
Besides UnitedHealth, the Dow’s biggest gainers included industrial giants Boeing and Caterpillar.
On Tuesday, Federal Reserve Governor Adriana Kugler said the US central bank could move to lower interest rates sooner rather than later if the job market cools “too much.”
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Briefing.com analyst Patrick O’Hare described the current ethos on Wall Street as assuming “a perfect environment where the stock market gets the best of both worlds” in which the Fed cuts interest rates as inflation slows without leaving the economy in recession.
O’Hare also cited rising expectations for a win by Donald Trump in the 2024 US presidential election, which could lead to tax cuts and higher corporate profits due to deregulation.
US retail sales slipped less than analysts anticipated in June in a dynamic that market watchers says keeps alive a soft landing narrative.
Meanwhile, the International Monetary Fund kept its 2024 global growth forecast at 3.2 per cent, unchanged from its April prediction, while warning of inflation risks and trade tensions ahead.
Among individual companies, Bank of America jumped 5.4 per cent after reporting higher than expected profits, due in part to increased earnings in global markets compared with the year-ago period.
UnitedHealth surged 6.5 per cent after reporting results that topped analyst expectations. The health company also reaffirmed that annual profits were on track with prior estimates when stripping out a costly cyberattack. AFP
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