UnitedHealth Propels Dow to New Heights
UnitedHealth Group’s shares surged 4.3% following an impressive second-quarter profit beat. This performance pushed the Dow and the S&P 500 Health Care index to all-time highs, highlighting the strength of the healthcare sector.
Bank Earnings Mixed, but Financials Shine
Bank of America’s stock jumped 3.6% after reporting better-than-expected profits and an upbeat forecast for net interest income. This positive news helped drive the S&P 500 Financials index to a record high. However, the banking sector saw mixed results, with Morgan Stanley and Charles Schwab facing challenges in their earnings reports.
Retail Sales Defy Expectations
June’s retail sales data surprised analysts by remaining unchanged, contrary to expectations of a 0.3% decline. Additionally, retail sales excluding automobiles rose 0.4%, further indicating consumer resilience. This unexpected strength in consumer spending supports the view of a robust U.S. economy.
Rate Cut Expectations Persist
Despite the strong economic data, traders continue to price in a high probability of a rate cut by September. The CME’s FedWatch tool indicates a 100% chance of a 25-basis-point reduction. Federal Reserve Chairman Jerome Powell’s recent comments have been interpreted as dovish, reinforcing market expectations.
Market Forecast
The short-term outlook for U.S. equities is bullish. The combination of strong corporate earnings, resilient consumer spending, and persistent rate cut expectations is likely to support further gains. Investors should watch for a potential broadening of the rally into small-cap stocks, as evidenced by the Russell 2000 index reaching its highest level since January 2022. However, traders should remain cautious of potential volatility in tech stocks, which have been primary drivers of the market’s performance this year.