Dow Hits Record High as Small- and Mid-Cap Stocks Lead Gains

The Dow reached a record high on Friday, driven by the performance of small- and mid-cap stocks and optimism about potential easing of monetary policy by the U.S. Federal Reserve. Major banks like JPMorgan and Citi saw mixed results, impacting their stock prices. Meanwhile, investors anticipate strong profit growth from various sectors.

The Dow touched a record high on Friday as this year's lagging stocks gained favor on optimism that the U.S. Federal Reserve will begin easing monetary policy in September, while big lenders fell after reporting mixed results. JPMorgan Chase's second-quarter profit increased on a boost from rising investment banking fees. However, shares of the world's largest bank dipped 0.1% after a 21.4% climb this year.

Wells Fargo slid 6.8% as the lender missed estimates for quarterly interest income, while Citigroup fell 1.7% even after it posted a surge in investment banking revenue. The S&P 500 Financials index shed 0.5%, while the banks index lost 1%. 'Bank earnings were a mixed bag to start off earnings season but buyers are still stepping in. That rotation into small- and mid-caps is still continuing and that's a positive sign overall,' said Ryan Detrick, chief market strategist at Carson Group.

As the S&P 500 and the Nasdaq hover near record highs, investors are hoping for strong profit growth from companies beyond tech heavyweights such as Nvidia, so that the U.S. stocks rally can broaden out. Analysts expect second-quarter earnings for S&P 500 firms to grow by 9.6%, from a decline of 2.8% in the same period in 2023, according to LSEG IBES data.