Dow Reaches Record Highs Above 40,000, Small Caps Ride The Rate-Cut Wave, EV Stocks Rally: What’s Driving Markets Friday? – Bank of New York Mellon (NYSE:BK)

It’s another memorable day for the stock market, as the blue-chip Dow Jones Industrial Average Index reaches new record highs, surpassing the 40,000-mark milestone and breaking the previous peak set in May.

Small caps continue their rally driven by strong bets on interest rate cuts, sustaining momentum after Thursday’s extraordinary surge. The Russell 2000 Index, as tracked by the iShares Russell 2000 ETF IWM, has had its best week of the year, gaining over 6%.

Each of the eleven S&P 500 sectors showed a gain Friday, with the index of the 500 largest U.S. corporations rising 0.9%. For the S&P 500, this marks the tenth positive week out of the last twelve.

The Nasdaq 100 also showed a solid rebound, rising by 1% after a 2.2% selloff the previous day.

On the macro front, producer inflation rose more than expected in June. However, this did not affect expectations for rate cuts, with traders firmly anticipating a cut in September, assigning it a near-certain probability.

The consumer sentiment index measured by the University of Michigan continues to show signs of weakness in July, though it also indicates a decrease in future inflation expectations.

Major banks such as JPMorgan Chase & Co. JPM, Citigroup Inc. C, and Wells Fargo & Co. WFC reported better-than-expected earnings, yet market reactions were negative, particularly for Wells Fargo amid a weakening outlook on net interest income.

Treasury yields were steady, with the 10-year yield hovering at 4.20%, on track for the lowest close since late March. The dollar weakened further, poised for its second consecutive week of declines.

In commodities markets, gold inched up 0.1%, battling for its fourth straight session of gains. Natural gas spiked 3%, while oil prices softened by 0.2%.

In the cryptocurrency market, Bitcoin BTC/USD rose by 1.3%, trading above $58,000.

Friday’s Performance In Major US Indices, ETFs

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY was 0.9% higher to $561.58.
• The SPDR Dow Jones Industrial Average DIA rose by 0.9% to $397.59.
• The tech-heavy Invesco QQQ Trust (ARCA: QQQ) rebounded 1% to $496.94.
• Sector-wise, the Consumer Discretionary Select Sector SPDR Fund XLY outperformed, up by 1.7%, while the Communication Services Select Sector SPDR Fund XLC lagged, up 0.1%.

• EV-related stocks rallied substantially amid strong expectations for Q2 deliveries. Shares of Lucid Group Inc. LCID, Rivian Automotive Inc. RIVN and Tesla Inc. TSLA rocketed 21%, 11% and 4% respectively.
• Bank of New York York Mellon Corp. BK rose over 5%, in reaction to its earnings, eyeing the strongest session in two years.
• QuantumScape Corp. QS rallied 18% after the company announced Thursday it entered into an agreement with Volkswagen’s PowerCo to industrialize solid-state batteries
• Carvana Co. CVNA rose over 8% to $140 after BTIG initiated coverage at Buy with $155 price target.

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Image created using artificial intelligence via Midjourney.