* U.S. June retail sales data significantly exceed expectations

* Russell 2000 Index hits highest closing record since 2022

* Spot gold prices hit historical highs

On July 16th, local time, the three major U.S. stock indices closed higher, with the Dow Jones Industrial Average firmly above 40,000 points, setting a new historical high. The market continued to assess economic data, the Federal Reserve's interest rate cut path, and bank stock earnings reports. The optimism triggered by expectations of interest rate cuts continued to dominate the market. On that day, the much-anticipated U.S. retail sales data were released, showing that American consumers still have momentum, supporting the view of a soft landing for the U.S. economy, while not changing the market's expectations for a Federal Reserve rate cut in September.

As of the close, the Dow Jones Industrial Average rose by 742.76 points, closing at 40,954.48 points, an increase of 1.85%; the S&P 500 stock index increased by 35.98 points, closing at 5,667.20 points, an increase of 0.64%; the Nasdaq Composite Index increased by 36.77 points, closing at 18,509.34 points, an increase of 0.20%.

On Tuesday, the Russell 2000 Index, which tracks the performance of small-cap stocks, closed up 3.5%, setting the highest closing record since 2022. It has risen more than 1% for five consecutive trading days, marking the longest winning streak since April 2020. This year, U.S. small-cap stocks have been under pressure, with the rise mainly concentrated among the technology "big seven." This style shift is seen as a positive sign.

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On the day, the communication services sector and the technology sector fell by 0.64% and 0.38%, respectively, leading the decline among the eleven major sectors of the S&P 500 Index.

Greg Bassuk, CEO of AXS Investments, said: "This sector rotation highlights the possibility of an interest rate cut as early as September. Small-cap stocks are among the companies most likely to benefit from a rate cut, and today we saw a combination of strong earnings, a resilient economy, and high confidence in a September rate cut."

On July 16th, data released by the U.S. Department of Commerce showed that U.S. retail sales in June were flat month-on-month, better than the market's expected decline of 0.1%, and increased by 2.3% year-on-year, with the previous value revised to a month-on-month increase of 0.26% and a year-on-year increase of 2.6%; core retail sales increased by 0.4% month-on-month, and the retail control group increased by 0.86% month-on-month, both significantly better than expected.

Among the 13 retail categories, three categories saw a decline. Specifically, automobile sales fell by 2.23% year-on-year, gas stations fell by 0.4% year-on-year, department stores rose by 3.25% year-on-year, apparel rose by 4.3% year-on-year, e-commerce rose by 9% year-on-year, healthcare rose by 0.67% year-on-year, furniture fell by more than 4% year-on-year, sports and leisure fell by 3.4% year-on-year, building and gardening fell by 0.9% year-on-year, electronic products rose by 2.7% year-on-year, and restaurants rose by 4.4% year-on-year.Analysts have indicated that following a series of recent weak data, the U.S. retail sales data for June showed that all economic activities for the month exceeded expectations, particularly the control group—which grew by 0.9% compared to the market expectation of 0.2%. Coupled with some upward revisions to the data for May, this suggests that U.S. consumers have maintained a certain level of resilience despite high interest rates, alleviating concerns about the economy falling into a recession.

The Atlanta Fed's GDPNow model estimates the U.S. second-quarter GDP growth at 2.5%, up from a previous forecast of 2.0%.

"Looking at recent economic data, the economy is slowing down, but not at a worrisome pace," said Tom Hainlin, investment strategist at U.S. Bank Wealth Management. "The Fed is seeing what it wants to see—it's a sweet spot where the economy is slowing, but not too much and not too fast."

The President of the Federal Reserve Bank of San Francisco, Mary Daly, stated on Tuesday that she is "increasingly confident" that inflation is moving closer to the Fed's 2% target.

Bank stocks have been releasing their earnings reports, including Bank of America and Morgan Stanley. Among them, Bank of America's second-quarter earnings exceeded expectations, with net interest income for the second quarter coming in below expectations. However, the bank stated that fully taxable equivalent net interest income (NII) will rebound to approximately $14.5 billion in the fourth quarter, and its stock price rose by 5.3% at the close on Tuesday.

Morgan Stanley's profits grew in the second quarter due to a rebound in investment banking activity, and its stock price increased by 0.91%. The financial report showed that Morgan Stanley's net profit for the second quarter rose to $3.1 billion, or $1.82 per share. In comparison, the net profit for the same period last year was $2.2 billion, or $1.24 per share.

In the commodity market, U.S. Treasury yields have continued to decline, and gold has continued to shine brightly, with spot gold reaching a historical high of $2,464.82 during New York trading hours.

On Tuesday, international oil prices fell. The price for light crude oil futures for delivery in August at the New York Mercantile Exchange fell by $1.15 to close at $80.76 per barrel, a decrease of 1.40%.