Traders work on the floor of the New York Stock Exchange on January 19, 2024.
Spencer Platt | Getty Images
The Dow Jones Industrial Average soared to a new high on the back of gains in Home Depot and Caterpillar as investors started to embrace some stocks outside of the technology bull market leaders this week.
The Dow added 456 points, or 1.1%, to a new record above 40,000. It was its first time above 40,000 since topping that round number milestone in late May. Home Depot added nearly 3% to bring its gain for the week to nearly 8%. Caterpillar added 1.8%.
The S&P 500 was higher by 1.1% and rose above the 5,600 level once again after falling below the threshold on Thursday. The Nasdaq Composite was up 1.3%.
During Thursday’s session, the S&P 500 posted its worst day since late April as investors sold their Big Tech winners in a major market rotation, pushing Nvidia lower by 5.6%. The 30-stock Dow was the outperformer, however, on Thursday, inching higher by 0.08% during the sell-off in the other major averages. The Dow continued to gain on Friday as investors jumped further into industrial names on hopes slowing inflation would be followed by a Federal Reserve rate cut in September. The Dow is up 1.8% on the week. The catalyst was a Thursday report showing the consumer price index declined 0.1% in June.
“The powerful growth story in AI has been all-consuming, but it’s not the only story in the market,” said David Russell, global head of market strategy at TradeStation. “Powell’s testimony this week and the CPI report remind investors that other catalysts can boost other kinds of companies. That’s especially true for a sector like utilities (this week’s leader), which emerged as an AI play earlier this year and now can potentially benefit from rate cuts.”
Dow Jones Industrial average, year-to-date
The Russell 2000 Index is up more than 6% for the week after a 1.5% gain on Friday as investors see a so-called soft landing for the broader economy giving a boost to smaller companies.
The market rallied even after meager reactions to banks’ second-quarter earnings. JPMorgan shares were 1% lower even as the bank posted second-quarter revenue higher than Wall Street expectations on a jump in investment banking fees. Citi stock dipped 2% despite beating on the top and bottom lines in the second quarter.
Wells Fargo shares tumbled 6% after the bank said net interest income, a key measure of lending profitability for banks, fell short of expectations in the second quarter.
A reading of wholesale inflation came in slightly hotter than expected on Friday, but Wall Street largely ignored those figures after Thursday’s more important consumer prices report showed slowing inflation.
Nvidia bounced 3.4% on Friday as investors couldn’t resist some of their favorite tech names that had sold off the day before.
The S&P 500’s 18% gain for the year has largely been led by technology stocks. The technology and communication services sectors of the market are both up about 20% on the year. No other major sector is outperforming the benchmark.
