U.S. stocks opened higher on Tuesday as investors weighed big bank earnings and a retail sales surprise amid growing belief that an interest rate cut is near.
The Dow Jones Industrial Average (DJI) rose about 0.5% shortly after the open, after the flagship index broke the 40,000 mark, setting an all-time closing record. The S&P 500 (GSPC) and the tech-heavy Nasdaq Composite (IXIC) both gained more than 0.3%, following their own daily gains.
Earnings season has ramped up ahead of the earnings release, with Bank of America (BAC) and Morgan Stanley (MS) the latest to report results. BofA’s quarterly profit fell but beat expectations, while MS’s jumped, both offering signs of a revival in investment banking. Charles Schwab (SCHW) and UnitedHealth (UNH) are also on the docket Tuesday.
More broadly, stocks are holding onto gains after Chairman Jerome Powell signaled that the Federal Reserve is preparing to start cutting rates soon, given recent strong inflation numbers.
Retail sales were flat but better than expected in June, data showed Tuesday, helping ease price pressures that have bolstered confidence in a September rate cut — a prospect that has already sparked broader optimism for stocks beyond tech. Traders had been pricing in a 100% chance the Fed would cut borrowing costs this month, according to CME FedWatch Data.
But some lawmakers have warned that a Fed change of course before the November presidential election could be seen as a partisan decision.
At the same time, political questions continued to preoccupy a market betting that former President Donald Trump is an even clearer frontrunner for the White House after surviving an assassination attempt this weekendThe Republican candidate’s choice of Sen. J.D. Vance as his running mate is seen as strengthening his chances.
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