FX.co ★ Dow Surges To New Record Closing High On Upbeat Earnings News

Stocks extended their upward momentum from the previous sessions, closing mostly higher on Tuesday. The Dow outpaced other indices by reaching a new record high.

The Dow surged 742.76 points, or 1.9%, closing at 40,954.48. Similarly, the S&P 500 advanced 35.98 points, or 0.6%, to set a new record at 5,667.20, while the Nasdaq climbed 36.77 points or 0.2% to 18,509.34.

Wall Street's strength was partly driven by positive earnings reports. Notably, Dow component UnitedHealth (UNH) saw significant gains after surpassing second-quarter earnings expectations. Bank of America (BAC) also experienced a notable uptick following better-than-anticipated earnings. Morgan Stanley (MS) rebounded from early losses to end positively, driven by stronger-than-expected second-quarter results.

Investors responded favorably to the latest U.S. economic data, including a report from the Commerce Department indicating that U.S. retail sales remained unchanged in June. The report shows that retail sales held steady after an upwardly revised 0.3% increase in May. This was in line with economists' predictions of no change following the initially reported 0.1% uptick in May.

Excluding a significant drop in sales of motor vehicles and parts, retail sales increased by 0.4% in June after a modest 0.1% rise in May. Analysts had anticipated a 0.1% increase in ex-auto sales.

"Investor sentiment seems bolstered by the strong retail sales data, alongside a growing belief that monetary policy might ease post-summer,” remarked Dan Coatsworth, investment analyst at AJ Bell.

The Labor Department's report on import prices revealed they were flat in June, contrary to expectations of a 0.2% rise. Previously, import prices had dipped by a revised 0.2% in May. Export prices, however, fell by 0.5% in June, following a revised 0.7% decrease in May.

Sector News

Housing stocks saw substantial gains, with the Philadelphia Housing Sector Index spiking by 5.3% to a record high. This sector's boost came despite the National Association of Home Builders reporting a surprising drop in homebuilder confidence for July.

Gold stocks also experienced significant strength, driven by a sharp rise in gold prices, as the NYSE Arca Gold Bugs Index surged 3.4%, reaching its highest point in more than two years.

The airline sector saw considerable gains as well, with the NYSE Arca Airline Index increasing by 3.3%. Banking, biotechnology, and telecom stocks also performed strongly, aligning with the broader upward trend across major sectors.

Other Markets

Internationally, the Asia-Pacific region showed a mixed performance. Japan's Nikkei 225 Index rose by 0.2%, and China's Shanghai Composite Index inched up by 0.1%, while Hong Kong's Hang Seng Index dropped by 1.6%.

European markets declined, with the French CAC 40 Index falling by 0.7%, the German DAX Index by 0.4%, and the U.K.'s FTSE 100 Index dipping by 0.2%.

In the bond market, treasuries rebounded from the previous session's pullback. The yield on the benchmark ten-year note, which moves inversely to its price, dropped 6.2 basis points to 4.167%.

Looking Ahead

On Wednesday, trading may be influenced by reports on industrial production and housing starts, along with the Federal Reserve's Beige Book.