Main Agreement
- The S&P 500 added 0.6% on Tuesday, July 16, 2024, amid stronger-than-expected retail sales data and greater certainty that the Federal Reserve will cut interest rates in September.
- Shares of health insurers rose after UnitedHealth Group posted better-than-expected second-quarter earnings.
- Shares of Charles Schwab fell after the financial services firm warned it would shrink its bank to maintain profitability.
Major US stocks traded higher after several companies posted strong earnings results and a report showed retail sales held steady in June compared with last month, beating economists’ forecasts.
Stocks also got a boost from growing belief among market participants that lower interest rates are coming. According to CME Group’s FedWatch tool, traders are now pricing in a 100% chance the Federal Reserve will cut its influential fed funds rate at the September meeting.
The S&P 500 added 0.6%, marking an all-time high close. The Dow rose more than 700 points, or 1.9%, to hit a record close for the second day in a row. After spending most of the session in negative territory, the Nasdaq rallied in the afternoon to post a daily gain of 0.2%.
Health insurance firms enjoyed a strong day on the stock market after industry giant UnitedHealth Group ( UNH ) beat second-quarter profit estimates, boosted by revenue growth from its Optum healthcare unit. Shares of UnitedHealth added 6.5% after strong results. Peers also posted gains, with shares of Molina Healthcare ( MOH ) jumping 8.2% to mark Tuesday’s top performer on the S&P 500.
Stronger belief that lower interest rates are on the horizon helped lift shares of companies in the housing industry, with the promise of lower interest rates heralding future home-buying activity. Shares of building materials provider Builders FirstSource ( BLDR ) rose 8.0%. Homebuilder stocks also moved higher, with Pultegroup ( PHM ), DR Horton ( DHI ) and Lennar ( LEN ) all up more than 6.5%.
Shares of Warner Bros. Discovery ( WBD ) jumped 7.6% after Bank of America pointed to multiple strategic options for the media conglomerate to create more value for its shareholders. Possible moves cited by analysts include spinning off the studio’s assets into an independent company or merging its streaming services with another entity.
Shares of Match Group ( MTCH ), which operates Tinder and other online dating platforms, rose 7.5% amid news that activist hedge fund Starboard Value has bought a stake worth about 6.6% of the company. In a letter to Match executives, Starboard highlighted the need for improved margins and discussed the possibility of pursuing a sale to take the company private.
Shares of Charles Schwab ( SCHW ) fell 10.2%, suffering the worst losses of any component of the S&P 500. CEO Walt Bettinger said the financial services firm will shrink its bank to try to maintain profitability. According to reports, the firm plans to streamline the use of capital by relying on off-balance sheet arrangements with external partners to hold customer deposits.
Other stocks in the financial services industry came under pressure after the warning from Schwab. Shares of Raymond James Financial ( RJF ) and Ameriprise Financial ( AMP ) fell 6.3% and 3.8%, respectively.
Progressive shares ( PGR ) fell 3.2% after the property and casualty insurer reported mixed quarterly results, with earnings per share (EPS) beating estimates but revenue slightly below expectations. After the earnings release, Morgan Stanley maintained its “overweight” rating on Progressive shares, highlighting strong underwriting profitability, but analysts pointed to lower-than-expected personal auto policies in force (PIF) as an area potential concern.