U.S. Market Rally Broadens Beyond Mega-cap Tech Stocks, Retail Sale Beat Expectations

Barry Adams
16 Jul, 2024
New York City

Stock market indexes advanced as the market rally broadened to small- and mid-cap stocks amid positive earnings from Bank of America, Morgan Stanley, and UnitedHealth Group. 

The S&P 500 index and the Nasdaq Composite advanced a fraction, and the Russell 2000 index jumped 1% and extended gains for the fifth session in a row. 

Market sentiment was bolstered after retail sales in June were ahead of estimates, indicating consumers are still spending. 

Retail and food services sales, not adjusted for inflation but adjusted for calendar, increased 2.3% in June, and sales increased slowed for the third month in a row, according to the monthly update released by the U.S. Census Bureau. 

May retail sales were upwardly revised to 2.6%. 

Retail and food services sales were unchanged from the previous month at $704.3 billion, motor vehicles and parts sales eased to $130.7 billion from $133.3 billion, and gasoline station sales eased to $51.9 billion from $53.3 billion in the previous month, respectively. 

Nonstore retail sales increased 1.9%, gasoline station sales decreased 3%, and motor vehicle and parts dealer sales fell 2% in June from the previous month. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.4% to 5,651.06, and the Nasdaq Composite rose 0.2% to 18,510.50.

The yield on 2-year Treasury notes edged lower to 4.47%, 10-year Treasury notes increased to 4.21%, and 30-year Treasury bonds edged higher to 4.42%.

WTI crude oil decreased $1.20 to $80.67 a barrel, and natural gas prices edged up 3 cents to $2.19 a thermal unit.

Gold increased by 20.69 to $2,442.47 an ounce, and silver rose 22 cents to $30.83. 

The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 104.39.

 

U.S. Stock Movers 

Bank of America increased 4.4% to $43.73 after the financial services company reported better-than-expected second-quarter results. 

Revenue in the quarter increased 1% to $25.4 billion from $25.2 billion, net income declined to $6.9 billion from $7.4 billion, and diluted earnings per share eased to 83 cents from 88 cents a year ago. 

Net interest income decreased 3% to $13.9 billion from $13.7 billion, and credit loss provision increased to $1.5 billion from $1.3 billion in the previous quarter and $1.1 billion in the period a year ago. 

The average deposit balance in the quarter increased by 2%, or $35 billion, to $1.9 trillion, and the company returned to shareholders $5.4 billion, $3.5 billion in stock repurchases, and $1.9 billion in stock dividends. 

Morgan Stanley advanced 1.1% to $106.65 after the investment bank reported better-than-expected quarterly results. 

Revenue in the second quarter increased to $15.0 billion from $13.5 billion, net income rose to $3.1 billion from $2.2 billion, and diluted earnings per share advanced to $1.82 from $1.24 a year ago. 

The wealth management unit's revenue increased to $6.8 billion from $6.7 billion, driven by a positive market environment and cumulative fee-based asset flows. 

Institutional securities increased to $7.0 billion from $5.7 billion, driven by higher trading activities by clients, strong investment banking fees, and a rise in debt underwriting fees. 

UnitedHealth Group rose 5.6% to $544.54 after the health insurance company reported better-than-expected quarterly results. 

Revenue in the second quarter increased to $98.9 billion from $92.9 billion, net income fell to $4.4 billion from $5.5 billion, and diluted earnings per share advanced to $4.54 from $5.82 a year ago. 

The company adjusted its full-year earnings per share outlook to between $15.95 and $16.40, reflecting the sale of its remaining stake in its South African unit. The company also completed the sale of its large Brazilian operations in the first quarter.