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The US stock market saw a significant increase on Tuesday, with the Dow Jones Industrial Average reaching a new closing high. This surge was driven by the belief that the US Federal Reserve is likely to start an easing cycle, which is anticipated to manage inflation and prevent a recession.
Market Response and Performance
Gold prices also reached a new high, reflecting the market’s response to the potential easing of monetary policy. All three main US stock indexes experienced positive gains, with the Dow Jones Industrial Average climbing 1.85%, the S&P 500 rising 0.6%, and the Nasdaq Composite adding 0.2%. The Russell 2000 small-cap index continued its winning streak, posting gains of more than 1% for the fifth consecutive day and reaching its highest point since January 2022. Dow transportation stocks outpaced the overall indices and ended at their highest level since August 2023.
The Commerce Department released stronger-than-expected retail sales data on Tuesday, providing further support for the market’s positive momentum. The data indicated that consumer spending, which accounts for over 70% of the US economy, remained robust despite tight monetary policy. This allayed concerns that rising interest rates could lead the US into a recession, contributing to the market’s overall optimism.
Corporate Earnings
Additionally, the season for second-quarter results was heating up, with companies such as UnitedHealth Group and Bank of America reporting earnings that exceeded expectations, further bolstering investor confidence.
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