Stocks mixed after hitting record highs on Monday

Stocks are mixed and the Dow is inching higher on Tuesday, remaining close to the all-time closing high recorded at the start of the week.

The Dow opened little changed in negative territory, down 3 points, but slipped 0.1% in the first few minutes of trading. It then recovered to be up 0.1%, or 21 points.

The S&P 500, also opened flat. The Nasdaq Composite opened 0.1% lower but has recovered slightly since.

All three benchmarks finished at all-time highs on Monday, adding onto six closing records last week. The S&P 500 surpassed its most recent record by just about half a point.

Even though markets appear flattish, it wouldn’t take much for indexes to reach a fresh closing record on Tuesday. Or stocks could continue their lackluster trade just below the brink of record highs until the Federal Reserve meets at the end of the month.

Expectations for a rate cut remain at 100%, with a 73% chance for a 25 basis point cut.

However, economic data on Tuesday was once again better than expected. Retail sales data for June came in stronger than forecast, growing 0.4% on the month. Industrial production for the same month was flat, but manufacturing and capacity utilization rose.

“Rate cuts? Seriously?” wrote MUFG chief financial economist Chris Rupkey in a research note. “The case for interest rate cuts looks increasingly weak as the economy is turning out to be stronger than expected both from the consumer side and on the part or manufacturers.”

Rate cut expectations also featured in Tuesday morning’s bank earnings. While JPMorgan, Goldman Sachs and Wells Fargo all beat estimates, JPMorgan downgraded its net interest income outlook because rate cuts will affect its business.

When the Fed lowers rates, mortgages and loans also become cheaper, thus affecting banks.