The Dow climbs to a new all-time high
Latest Data from US Trade Brings Hope for Soft Landing of US Economy. Optimism among Investors Persists Despite Prospect of Second Trump Presidency. Stocks of Companies Tied to Trump Suffer Again.
The latest US economic data is well received by investors on Wall Street. The Dow Jones Industrial Average of blue-chip stocks rose 1.9% on Tuesday to 40,954 points in trading, marking a new closing record. The tech-heavy Nasdaq gained 0.2% to 18,509 figures and the broad-based S&P 500 rose 0.6% to 5,667 levels.
Retail sales and US import prices stagnated in June and did not decline as expected. "Investors were initially disappointed because the Fed's data cannot help in making a decision on interest rate cuts," said Sam Stovall, Chief Strategist at CFRA Research. "But it's also a comfort that the US economy is not steering towards a recession soon."
Meanwhile, renewed gold price expectations helped push the gold price to a new record high of $2,466.21 per ounce. US Federal Reserve Chairman Jerome Powell had said the previous day that the latest inflation data had weakened the confidence of political decision-makers that inflation was on a sustainable downward path. Traders interpreted this as a signal that the first interest rate cut might not be far off. Constanin Oldenburger, Analyst at broker CMC Markets, warned: "It's one thing to say that the data justifies a rate cut. It's another to agree within the Fed that it should be done."
Possible Trump Victory Boosts Stock Market
Political developments continued to drive the markets. Donald Trump is running for re-election with his former critic J.D. Vance as his Vice Presidential running mate. The 39-year-old Senator from Ohio is Trump's chosen Vice Presidential candidate. Nearly simultaneously, Trump's official nomination as the Republican Party's leading candidate was announced.
Market observers believe that the attack on Trump on Saturday could improve his campaign chances. The influence of speculation on US stocks is largely positive, as his policies include lower taxes, among other things. However, it is also expected that Trump could significantly restrict trade - especially with China. This could burden companies heavily dependent on the second largest economy in the world. The nomination of Vance as Vice Presidential candidate is also seen as an additional problem. He recently stated that he sees China as "the greatest threat" to the US.
In the spotlight among individual stocks were the balances of major banks. At Bank of America, the second largest bank in the US, the corporate profit declined due to lower interest income and higher provisions for potential credit losses. However, the figures exceeded expectations. Morgan Stanley, on the other hand, reported a strong increase in earnings for the first quarter. In wealth management, growth remained modest. Bank of America gained more than 5%, Morgan Stanley improved by around 1%.
However, the titles of broker Charles Schwab fell sharply after a profit decline of more than 10%.
Down went it also for companies linked to Trump. Losses from the stock surges on Monday pressured papers of his media firm TMTG, which lost roughly nine percent. The stock of software developer Phunware, which was contracted by Trump in 2020 to develop a mobile app for his campaign, lost almost nine percent. Rumble, the popular video-sharing platform among conservatives, lost nearly a percent in their titles.
You can follow the further stock market developments of today here.
The optimism in the stock market is partly due to the possible re-election of President Trump, as investors believe his policies like lower taxes could be beneficial. Despite the potential negative impact on trade, especially with China, the Dow Jones Industrial Average continued to perform well, closing at a new record of 40,954 points. Despite the stagnation in retail sales and US import prices, the economy appears to be avoiding a recession, which has further boosted stock prices.
