**Dow Returns to the 40,000-Point Milestone

**Russell 2000 Index Rises 5.5% for the Week

**Bank Stocks Kick Off Q2 Earnings Season

Investors are anticipating a bull market expansion beyond the realm of tech stocks, with the Dow Jones Industrial Average (DJIA) setting a new intraday record and returning to the 40,000-point milestone for the first time since May.

As of the close, the Dow Jones Industrial Average increased by 247.15 points, or 0.62%, to 40,000.90; the S&P 500 index rose by 30.81 points, or 0.55%, to 5,615.35; the Nasdaq Composite closed at 18,398.44, up 115.04 points, or 0.63%; the Russell 2000 index, which tracks small-cap stocks, finished higher by 1.09%, at 2,148.27.

For the week, inflation showed signs of slowing down, and investors are hopeful that the Federal Reserve will initiate a rate-cutting cycle in September, believing in a soft landing for the overall economy, hence the rotation of funds. The DJIA rose by 1.6% for the week, the S&P 500 gained 0.9%, and the Nasdaq Composite increased by 0.3%. Small-cap stocks, which had previously lagged, attempted to catch up, with the Russell 2000 index surging 5.5% for the week, outperforming the major indices.

September Rate Cut Expectations Rise

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The U.S. Department of Labor disclosed the latest data before the market opened, showing that the Producer Price Index (PPI) for June rose by 0.2% month-over-month, higher than the expected 0.1%, and increased by 2.6% year-over-year, marking the largest year-over-year increase since March 2023. The core PPI, excluding food, energy, and trade services, remained flat month-over-month, compared to the previous month's increase of 0.2%, with the June core PPI rising by 3.1% year-over-year. Last month, service prices rose by 0.6% month-over-month, offsetting a 0.5% drop in goods prices, of which energy prices fell by 2.6%.

The Chief Investment Office (CIO) of UBS Wealth Management said in a report sent to First Financial Daily reporters: "As inflation and employment data begin to soften, the prospect of a Federal Reserve rate cut becomes clearer. If future data continue to maintain the current trend, we expect that the July FOMC meeting may signal readiness to cut rates in September." UBS stated that its base case remains a soft economic landing, meaning economic growth slightly below trend levels, with the Federal Reserve cutting rates once per quarter. If subsequent data continue to weaken, the Federal Reserve may also be more aggressive in lowering rates.

According to the CME Group's FedWatch Tool, as of the close, the probability of a rate cut in September stands at 94.4%, with a 5.6% chance of holding steady.The second-quarter earnings season is upon us

Major banks kick off the second-quarter earnings season for U.S. stocks, with investors looking to the reports for the latest insights from bank executives on the current state and outlook of the U.S. economy.

JPMorgan Chase, the largest U.S. bank by assets, announced favorable earnings before the market opened, benefiting from a market rebound. The bank reported a profit of $18.15 billion, a year-over-year increase of 25%, with revenue up 20% to $50.99 billion. Looking at the business segments, investment banking revenue soared by 52%, and equity trading income increased by 21%. During the period, the bank made a provision for credit losses of $3.05 billion, indicating that it expects more borrowers to default in the future. As of the end of June, the bank's total assets reached $4.1 trillion.

JPMorgan Chase CEO Jamie Dimon once again issued a warning, stating that although some progress has been made in fighting inflation, there are still various inflationary forces at play, such as huge fiscal deficits, infrastructure demands, supply chain restructuring, and so on. Therefore, inflation and interest rates may continue to be higher than market expectations.

Citigroup reported revenue of $20.14 billion for the last quarter, a 4% increase year-over-year, with net profit growing by 10% to $3.22 billion. Due to the recovery from the 2023 low in bond and new share issuance, and the resurgence of merger and acquisition activities, the bank's investment banking revenue surged by 60% year-over-year, and equity trading income increased by 37%. Citigroup CEO Jane Fraser said in a press release that the strong market performance in the second quarter led to better-than-expected results for the bank, reflecting progress in strategic execution and the benefits of a diversified business model.

Wells Fargo fell by 6.0% on Friday, with revenue for the quarter from April to June at $20.69 billion, growing by only 0.7% year-over-year, and net profit at $4.91 billion. The key indicator measuring the profitability of the bank's loan business did not meet expectations, with net interest income for the quarter down by 9% year-over-year, mainly due to high interest rates increasing financing costs, which had a negative impact on the aforementioned business.

On the commodity front, international oil prices fell on Friday, ending a four-week upward trend. WTI crude oil futures fell by 41 cents or 0.5%, closing at $82.21 per barrel; Brent crude oil futures fell by 37 cents, a 0.4% drop, to $85.03 per barrel. U.S. oil fell by 1.1% this week, while Brent oil accumulated a 1.7% decline.

Gold prices traded above the key level of $2,400 per ounce on Friday, marking a third consecutive week of gains. Spot gold fell by 0.1% to $2,411.6 per ounce; U.S. gold futures fell by 0.2%, to $2,416.7 per ounce.