Dow, small caps surge on rate cut hopes, solid data
June retail sales stronger than expected
BofA profit beats expectations
UnitedHealth rises after Q2 profit beats estimates
Russell 2000 touches multi-year high
Indexes: Dow up 1.65%, S&P up 0.34%, Nasdaq down 0.22%
Updates to 14:14 EDT
By Stephen Culp
NEW YORK, July 16 (Reuters) - U.S. stocks were mixed on Tuesday, with the Dow Jones Industrial Average building on Monday's all-time closing high after solid retail sales data bolstered expectations that the U.S. Federal Reserve is close to easing interest rates.
The S&P 500 also rose, butmegacap growth stocks, led by Nvidia Corp NVDA.O and Microsoft Corp MSFT.O, pulled the tech-heavy Nasdaq lower.
Economically sensitive small caps extended their rally. The Russell 2000 .RUT scored a fifth straight day of gains greater than 1%, its longest winning streak since April 2000. The index was last up 2.9%, touching its highest level since January 2022.
Dow transportation stocks .DJT also outperformedthe broader indexes as investors increasingly focused on undervalued areas of the market.
Value stocks .IVX, which have underperformed their growth peers .IGX and the broader S&P 500 so far this year, jumped1.3%.
"This rotation underscores the likelihood of interest rate cuts as early as September," said Greg Bassuk, CEO at AXS Investments in New York. "Small cap companies are among the best-positioned to benefit from rate cuts, and today we're seeing this trifecta of strong earnings, a resilient economy and high confidence of a rate cut in September."
Economic data on Tuesday included stronger-than-expected retail sales reported by theCommerce Department. This providedreassurance that consumers, responsible for about 70% of U.S. gross domestic product, have stayed resilient despiterestrictive monetary policy, and easedfears that high interest ratescould tip the economy into recession.
"We are in a Goldilocks environment right now, with inflation dropping, the economy continuing to perform well, and slightly better-than-expected corporate earnings," said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York.
Second-quarter earnings season is ramping up.
UnitedHealth Group UNH.N jumped 5.9% after reporting consensus-topping profit, lifting the blue-chip Dow .DJI and the S&P 500 Health Care index .SPXHC to all-time highs.
Bank of America's BAC.N second-quarter profit beat expectations, and underwriting fees rose as capital markets resurged. The second-largest U.S. bank also provided upbeat net interest income guidance, sending its shares up 5.7%.
Morgan Stanley MS.N rose1.1% evenafter the investment bankposted disappointing wealth management revenue.
Charles Schwab SCHW.N slid 8.6%after reporting a dip in interest income.
At 2:14 p.m. ET, the Dow Jones Industrial Average .DJI rose 664.62 points, or 1.65%, to 40,876.34, the S&P 500 .SPX gained 19.29 points, or 0.34%, to 5,650.51 and the Nasdaq Composite .IXIC dropped 40.90 points, or 0.22%, to 18,431.67.
Of the 11 major sectors in the S&P 500, industrials were enjoying the largest percentage gains, while technology .SPLRCT and communication services .SPLRCL were the only two in negative territory.
Tinder parentMatch MTCH.O jumped7.8% on newsthat activist investor Starboard has a stake of over 6.5% in the company.
Interactive Brokers IBKR.O and J.B. Hunt Transport Services JBHT.O were among those due to post earnings after the bell.
Advancing issues outnumbered decliners on the NYSE by a 3.90-to-1 ratio; on Nasdaq, a 2.91-to-1 ratio favored advancers.
The S&P 500 posted 88 new 52-week highs and three new lows; the Nasdaq Composite recorded 277 new highs and 28 new lows.
Growth v Value YTD https://reut.rs/4f8a44E
Reporting by Stephen Culp; Additional reporting by Lisa Mattackal and Ankika Biswas in Bengaluru; Editing by Richard Chang
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