In mid-day trading, the Dow went up by 594 points, or 1.5%, to 40,806. The S&P 500 rose 0.4%, but the Nasdaq fell 0.1%. Investors focused on small companies, pushing the Russell 2000 to a new 52-week high with a 2% rise.
AI Stocks Down and Stock Market Update
AI stocks like Nvidia, Advanced Micro Devices, Super Micro Computer, Broadcom, and Micron Technology were down on Tuesday morning, each dropping around 2%.
Bank Earnings Reports
Bank of America and Morgan Stanley released their earnings reports. Bank of America’s stock rose over 4% after their earnings were better than expected, while Morgan Stanley’s stock went up just over 1.5%.
Federal Reserve Rate Cut Expected
The Dow Jones Industrial Average went up by 500 points on Tuesday morning, reaching a new record high. Investors now believe the Federal Reserve will lower a key interest rate by September. According to CME FedWatch, a tool that looks at the Federal Reserve’s actions, there is a 93.3% chance that the Fed will lower its key rate by a quarter percentage point to a range of 5% to 5.25% in September, down from the current range of 5.25% to 5.5%.
There is also a 6.7% chance of a half-percentage-point cut in September. Some traders think the Fed might announce the cut at its meeting at the end of July and then again in September. These predictions came after a report in June showed that inflation is slowing down.