Traders work on the floor of the New York Stock Exchange during afternoon trading on June 03, 2024 in New York City.
Michael M. Santiago | Getty Images
Stock futures are little changed on Tuesday night after the Dow Jones Industrial Average posted its best day since June 2023.
Futures tied to the Dow added 29 points, or 0.07%. S&P 500 futures hovered just below the flatline, while Nasdaq 100 futures inched lower by 0.03%.
In after-hours trading, Five Below lost more than 9% after announcing the departure of its chief executive officer and appointment of Kenneth Bull as its new interim president and CEO. J.B. Hunt Transportation Services dipped 2.8% after reporting worse-than-expected second-quarter results, which were pressured by higher insurance expenses and a soft freight market that has impacted over-the-road truck competition.
Stocks are coming off of a strong session as investors’ rotation into areas outside of technology continued.
The 30-stock Dow rallied more than 700 points and closed at an all-time high, while also recording its best session since June 2023. The S&P 500 added 0.64%, while the tech-heavy Nasdaq Composite ended the day just 0.2% higher.
Small-cap stocks have seen a resurgence since last week’s June consumer price index report, with some investors now rotating out of megacap technology and popular artificial intelligence leaders into small caps and cyclical stocks. On Tuesday, the Russell 2000 added more than 3%, notching its fifth straight day of gains. The small-cap index has jumped more than 10% this month.
“The Dow has spent most of the past two years lagging the S&P 500 index, but it has new wind in its sails this summer on the hopes that the market rally will broaden from a narrow set of technology companies into a broader array of companies throughout the economy,” said Chris Zaccarelli, chief investment officer of Independent Advisor Alliance.
This broadening market rally is underway as traders have become substantially more optimistic on an impending interest rate cut, which should benefit small caps and companies with higher financing costs. Traders now see 100% odds the Federal Reserve will lower rates in September, according to the CME FedWatch tool.
Looking ahead to Wednesday, United Airlines, Discover Financial Services, Johnson & Johnson and U.S. Bancorp are some of the names set to release quarterly earnings results. The Fed’s Beige Book will also be released, as will housing starts and building permits data for June.
Trump says that if elected, he will allow Fed Chair Jerome Powell to finish his term, Bloomberg reports
Donald Trump will permit Federal Reserve Chair Jerome Powell to finish his term if elected in November, the Republican presidential candidate told Bloomberg Businessweek in an interview.
“I would let him serve it out, especially if I thought he was doing the right thing,” Trump told Bloomberg. Powell is serving a second four-year term as Fed chair, ending in early 2026.
Powell first became Fed chairman in 2018 and has been subject to criticism from then-President Trump over the years on interest rate policy.
As recently as February, Trump told Fox Business that he would not reappoint Powell to lead the Fed.
— Darla Mercado
Russell 2000 had a history-making performance on Tuesday, Bespoke Investment Group says
Tuesday’s gains in small caps gave the Russell 2000 index the most overbought daily reading for any major U.S. index, according to Bespoke Investment Group.
“History was made today. The Russell 2000 closed 4.4 standard deviations above its 50-day moving average. No other major US index (Dow since 1900, S&P 500 since 1928, and Nasdaq since 1971) has ever closed at that much of an extreme,” the firm said in a post on X.
The Russell added 3.5% during Tuesday’s trading session, notching its fifth straight day of gains as investors piled into small caps in the hopes that interest rate cuts will improve the borrowing environment for those stocks.
— Pia Singh
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