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Dow Jones surged 1.7% in a single trading day as rate cut hopes accelerate. Easing US Retail Sales data reignited market bets of a September rate cut. Dow Jones sets a new record high for a second day in a row.
Dow Jones surged to a second record-setting day in a row, climbing over 680 points to chalk in a fresh all-time peak above 40,900.00 as market sentiment buries the needle even further into hopes of a September rate cut from the Fed.
US Retail Sales slumped flat in June, printing at 0.0% in-line with forecasts and falling from the previous month’s revised 0.3% uptick, signaling that the US domestic economy is continuing to soften and prompting a broad-market rush into expectations of a September rate cut.
The Dow Jones soared over 680 points at its highest point on Tuesday as the major equity index makes its way toward 41,000.00 after crossing the 40,000.00 major handle for the first time back in May.
United Health soared 5.55% to $544.16 per share on Tuesday after it reported better-than-expected earnings in Q2, helping to send the Dow Jones further into the stratosphere. Over two-thirds of the Dow Jones in in the green for the day, though tech stocks and AI-linked stocks suffered small losses as the market pivots into rate cut exposure.
Merck & Co Inc. (MRK) fell -1.5% to $126.20 per share, followed closely by Microsoft Corp. (MSFT) and Intel Corp. (INTC), falling -1.43% and -1.2%, respectively.
According to the CME’s FedWatch Tool, rate markets have a September rate trim fully priced in, with functionally 100% odds of at least a quarter-point rate cut when the Federal Open Market Committee (FOMC) meets on September.
The FOMC’s upcoming rate call on July 31 is still broadly expected to be a hold as policymakers wait for a few more months of data to confirm inflation is easing to targets before pulling the trigger.
Technical Factors
On Tuesday, buyers took advantage of the short interest and drove the Dow Jones to a record intraday high for the second straight day. Given that the major market index is headed for one of its biggest single-day performances of 2024, technical resistance has vanished at the high end. Over the last five trading days, the Dow Jones has increased by more than 4%, and the index is expected to test the 41,000.00 technical level soon.
