U.S. Stocks Near Record Highs as Companies Beat Profit Expectations

The stock market is on fire as U.S. stocks flirt with record highs on Tuesday, fueled by better-than-expected profits from key companies. A widespread rally has lifted five out of every six stocks in the S&P 500, pushing the index up 0.4% in afternoon trading, on track to surpass its all-time high set just last week.

Leading the charge is UnitedHealth Group, which saw its stock soar 6% after reporting stronger-than-expected results for the spring, despite losses from a cyberattack. Bank of America also rallied 5.5% after beating profit forecasts, driven by growth in its investment banking business.

While some Big Tech stocks experienced minor declines, the overall market performance is seen as a positive sign of a healthier stock market. Market watchers have been hoping for a broader market rally, with smaller companies outpacing their larger rivals as well.

In other news, the bond market saw some reversals in yields, with longer-term yields dropping while shorter-term yields rose following a report showing steady retail sales last month. The yield on the 10-year Treasury fell to 4.17%, down from 4.23% on Monday, reflecting rising expectations of a Fed interest rate cut in September.

Despite the strong retail sales data, the Federal Reserve faces risks in deciding when to ease economic brakes applied through high interest rates. Traders are betting heavily on a rate cut in September, but the Fed must tread carefully to avoid triggering a recession or reigniting inflation.

Stock markets abroad showed mixed results, with European indexes lower and Asian indexes varied. Overall, the U.S. stock market continues to surge, driven by positive earnings and investor optimism.