The US stock market experienced a significant rally on July 16, 2024, with the Dow Jones Industrial Average and S&P 500 both reaching new record highs. The Dow Jones surged 1.85% or 742 points to close at 40,954.48, marking its best daily performance since June 2023. The S&P 500 rose 0.64% to 5,667.20, setting its 38th all-time high this year.The rally was notably broad-based, with nearly nine out of every ten stocks in the S&P 500 rising. This widespread participation contrasted with previous record-setting days that were primarily driven by a handful of Big Tech stocks. UnitedHealth Group and Bank of America led the gains after reporting stronger quarterly profits than expected.Small-cap stocks significantly outperformed, with the Russell 2000 index jumping 3.5%, nearly six times the S&P 500’s gain. This shift towards smaller companies and value stocks suggests investors are repositioning for a potential lower interest rate environment.The market optimism was fueled by expectations of a potential Federal Reserve interest rate cut in September. This sentiment was bolstered by strong retail sales data and less aggressive comments from Fed officials. Fed Chairman Jerome Powell stated that the central bank would not wait to lower interest rates until inflation reaches its 2% target, further supporting the market’s positive outlook.While the overall market sentiment was positive, there were some notable exceptions. The Nasdaq composite lagged behind with a modest gain of 0.2%, as some of the year’s biggest tech winners saw declines. Additionally, Charles Schwab’s stock fell 10.2% due to a decline in bank deposits.The day’s rally reflects growing investor confidence in the US economy’s ability to achieve a ‘soft landing,’ with inflation cooling without tipping into a recession. However, analysts caution that risks remain on both sides of the economic tightrope the Federal Reserve is walking.
Key points
- The Dow Jones and S&P 500 reached new record highs on July 16, 2024, with the Dow surging 1.
- The rally was broad-based, with nearly 90% of S&P 500 stocks rising, led by strong performances from UnitedHealth Group and Bank of America.
- Expectations of a potential Federal Reserve interest rate cut in September fueled market optimism.
- Small-cap stocks outperformed, with the Russell 2000 index jumping 3.
85% and the S&P 500 rising 0.
64%.
5%, indicating a shift in investor focus.
Contradictions👾While most indices showed significant gains, the Nasdaq composite lagged with only a 0.
2% increase, as some major tech stocks declined.
