Stock Market News Today: Markets mixed; Dow surges, while Nasdaq, S&P lag (SP500)

Wall Street’s blue-chip Dow (DJI) index on Tuesday jumped to a fresh intraday high, buoyed by another post-earnings surge in one of its components.

On the other hand, a continued rotation out of megacap technology stocks into small-caps limited gains in the benchmark S&P 500 (SP500) and weighed on the tech-heavy Nasdaq Composite (COMP:IND).

The Dow (DJI) was up 1.42% to 40,782.03 points in midday trade, while the S&P (SP500) had added 0.38% to 5,652.58 points. The Nasdaq (COMP:IND) seesawed, last down 0.02% to 18,469.00 points.

The Dow (DJI) was buoyed by UnitedHealth (UNH). The Minnetonka, Minn.-based health insurer saw a negative reaction in the immediate aftermath of its quarterly results, but its shares have since popped more than 5%. The company delivered an adjusted profit per share beat and stuck to its annual guidance for that metric, despite a big impact from a February cyberattack at its Change Healthcare unit.

The S&P 500 Health Care sector also advanced on the boost from UnitedHealth (UNH), and was among nine sectors out of 11 that were in positive territory. Technology and Communication Services were the two losers.

The fall in those two latter sectors came amid a mixed showing in the “Magnificent 7” club, with Nvidia (NVDA) and Microsoft (MSFT) shedding more than 1% each. The performance upheld a trend from last week which has seen traders rotating out of the tech behemoths and into other areas such as defensive and value stocks and small-cap names. In fact, the Russell 2000 (RTY) index – the barometer for small-caps – hit its highest levels since January 2022.

“If current levels hold, this will be the biggest 5-day outperformance that the Russell 2,000 (small-caps) has ever seen versus the S&P 500 (large-caps). This would eclipse prior 5-day stretches ending 10/19/87 (the ’87 crash) and 3/25/20 (post-COVID crash bottom),” Bespoke Investment Group noted on X (formerly Twitter).

Meanwhile, monetary policy continued to be on market participants’ minds, following Federal Reserve chair Jerome Powell’s appearance at the Economic Club of Washington, D.C. on Monday.

Powell in an interview indicated that the Fed would not wait until inflation was down to its 2% target before cutting interest rates.

“The implication of that is that if you wait until inflation gets all the way down to 2%, you’ve probably waited too long because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%,” Powell had said.

According to the CME FedWatch tool, the odds of a 25 basis point rate cut by the Fed at its September meeting were now at a whopping ~93%, implying almost outright certainty that policy easing was coming. That confidence also helped spot gold (XAUUSD:CUR) hit a new all-time high.

Additionally, Tuesday’s economic calendar grabbed some attention via the latest retail sales report. The U.S. Census Bureau said headline retail sales in June were flat M/M at $704.3B, an unexpectedly better reading than the anticipated fall of 0.3%. Furthermore, May’s retail sales figure was revised upward to 0.3% from 0.1%.

The data showed that the economy was still chugging along even as inflation moved towards the right direction, thus strengthening bets that the Fed would be able to deliver a soft landing.

Looking at other active stocks, Bank of America (BAC) climbed more than 5% after the number two U.S. lender forecasted a net interest income beat for the fourth quarter despite missing the consensus mark on that metric for Q2.