Wall Street stocks soared on Tuesday, with the Dow Jones Industrial Average reaching a record closing high, as investors grew optimistic about the Federal Reserve’s potential to begin easing interest rates. Strong retail sales data provided further evidence that the economy is resilient despite high interest rates, reinforcing the belief that a rate cut could be on the horizon as early as September.
This optimism fueled a strong rally in small-cap stocks, which are typically seen as benefiting from lower interest rates. The Russell 2000 index surged 3.5%, marking its fifth consecutive day of gains greater than 1%— its longest winning streak since April 2000.
Value stocks also performed well, outperforming their growth counterparts as investors rotated into sectors deemed undervalued. The Dow Transportation stocks experienced their largest one-day percentage gain since November, reaching their highest closing level since August 2023.
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Positive second-quarter earnings reports from companies like UnitedHealth Group and Bank of America further boosted market sentiment. However, Charles Schwab saw its shares decline after reporting a dip in interest income.