Dow and S&P 500 end at new highs after bullish earnings reaction

NEW YORK – The Dow Jones Industrial Average hit another record high on July 16 on a bullish reaction to positive earnings reports and a growing likelihood of U.S. interest rate cuts.

The blue-chip index rose 1.9 percent, or more than 740 points, to close the day at 40,954.48, setting a second consecutive record.

The broad S&P 500 index gained 0.6% to 5,667.20, also a record, while the technology-heavy Nasdaq Composite index added 0.2% to 18,509.34.

The record performance was driven in part by huge gains at Bank of America and Dow-owned UnitedHealth Group after their earnings reports, as well as an ongoing rotation into smaller companies that have underperformed in 2024 but are expected to be boosted by the Federal Reserve’s rate cuts.

Apart from UnitedHealth, the biggest gainers in the Dow Jones index were industrial giants Boeing and Caterpillar.

On July 16, Federal Reserve Governor Adriana Kugler said the U.S. central bank could cut interest rates sooner rather than later if the labor market cools “too much.”

Briefing.com analyst Patrick O’Hare described the current philosophy on Wall Street as one of an “ideal environment where the stock market gets the best of both worlds,” in which the Fed cuts interest rates as inflation slows without falling into a recession.

Mr O’Hare also mentioned growing expectations that Donald Trump will win the 2024 US presidential election, which could lead to tax cuts and higher corporate profits thanks to deregulation.

U.S. retail sales fell less in June than analysts had predicted, supporting the theory of a soft landing, according to market watchers.

Meanwhile, the International Monetary Fund maintained its global growth forecast for 2024 at 3.2%, unchanged from its April forecast, while warning of risks of inflation and trade tensions.

Among individual stocks, Bank of America rose 5.4% after reporting better-than-expected earnings, driven in part by higher gains in global markets compared with the same period last year.

UnitedHealth rose 6.5 percent after posting results that beat analysts’ expectations. The healthcare company also said its full-year profit was in line with previous estimates after recovering from a costly cyberattack. AFP