Dow soars to fresh record while gold prices hit all-time high

People shop at a grocery store in Brooklyn on July 11, 2024 in New York City. Stocks rose on Thursday following a morning report by the Bureau of Labor Statistics showing that inflation eased more than expected in June. (Photo by Spencer Platt/Getty Images/AFP)

New York, United States — The Dow rocketed to a fresh record Tuesday while gold prices also hit an all-time peak, as rising expectations for Federal Reserve interest rate cuts in 2024 lift Wall Street to new heights.

After a down session in Europe, major US indices again forged higher led by the blue-chip Dow index.

The Dow piled on 1.9 percent or more than 740 points to finish at 40,954.48, posting a second straight record. The S&P 500 also advanced to a fresh all-time peak.

READ: Recent data adds to Fed confidence on cooling inflation: Powell

The records were driven partly by outsized gains for Bank of America and Dow member UnitedHealth Group following earnings reports, as well as an ongoing rotation of funds towards smaller companies that have underperformed in 2024 but are expected to be boosted by Federal Reserve interest rate cuts.

On Tuesday, Federal Reserve Governor Adriana Kugler said the US central bank could move to lower interest rates sooner rather than later if the job market cools “too much.”

Briefing.com analyst Patrick O’Hare described the current ethos on Wall Street as assuming “a perfect environment where the stock market gets the best of both worlds” in which the Fed cuts interest rates as inflation slows without leaving the economy in recession.

O’Hare also cited rising expectations for a win by Donald Trump in the 2024 US presidential election, which could lead to tax cuts and higher corporate profits due to deregulation.

Shifting expectations on the Fed also propelled gold to a new record. The yellow metal jumped 1.9 percent to 2,450.07 dollars per ounce.

But bourses in London, Paris and Frankfurt all declined.

German investor confidence fell for the first time in a year in July, according to the ZEW institutes economic expectations index.

The International Monetary Fund weighed in with its latest global outlook update, which indicated the world economy will grow 3.2 percent this year, unchanged from its April forecast.

READ: IMF maintains 2024 global growth forecast, warns of inflation risk

But the IMF trimmed its forecasts for the United States and Japan and also warned of ongoing inflation risks and trade tensions ahead.

Earlier, in Asia, Hong Kong dropped more than one percent owing to further losses in the tech sector, while Sydney, Singapore, Manila, Bangkok and Jakarta also fell.

Tokyo, Seoul, Wellington, Taipei and Mumbai edged up and Shanghai was slightly higher with traders awaiting policy measures from China’s leaders as they hold a key economic meeting this week.

On the corporate front, Cartier-owner Richemont said its quarterly sales in China tumbled by 27 percent as the deepening economic malaise in the world’s second-largest economy lashes luxury firms.

Key figures around 2050 GMT

New York – Dow: UP 1.9 percent at 40,954.48 (close)

New York – S&P 500: UP 0.6 percent at 5,667.20 (close)

New York – Nasdaq: UP 0.2 percent at 18,509.34 (close)

London – FTSE 100: DOWN 0.2 percent at 8,164.90 points (close)

Paris – CAC 40: DOWN 0.7 percent at 7,580.03 (close)

Frankfurt – DAX: DOWN 0.4 percent at 18,518.03 (close)

EURO STOXX 50: DOWN 0.7 percent at 4,947.83 (close)

Tokyo – Nikkei 225: UP 0.2 percent at 41,275.08 (close)

Hong Kong – Hang Seng Index: DOWN 1.6 percent at 17,727.98 (close)

Shanghai – Composite: UP 0.1 percent at 2,976.30 (close)

Euro/dollar: DOWN at $1.0903 from $1.0894 on Monday

Dollar/yen: UP at 158.39 yen from 158.06 yen

Pound/dollar: UP at $1.2974 from $1.2968

Euro/pound: FLAT at 84.01 pence

West Texas Intermediate: DOWN 1.4 percent at $80.76 per barrel

Brent North Sea Crude: DOWN 1.3 percent at $83.73 per barrel