Stock market today: Dow extends gains as banks shine, Microsoft hits record high

Investing.com -- The S&P 500 delivered swashbuckling gains Tuesday as investors cheered better-than-expected quarterly results from a slew of major corporations including Wall Street banks and a record high in Microsoft amid AI-optimism.

The Dow Jones Industrial Average rose 1.1%, or 366 points, the Nasdaq was up 0.8%, and the S&P 500 rose 0.7% to end the day at 52-week highs.

Wall Street banks continue to impress on earnings stage

Bank of America Corp (NYSE:BAC) led the move higher in banking stocks, rising more than 4% after reporting second-quarter earnings that topped analyst estimates as higher interest rates boosted loan income.

Morgan Stanley (NYSE:MS), meanwhile, rallied 6% after its second-quarter results beat estimates on both the top and bottom lines as performance in its wealth management business offset weakness in its trading business amid a drop in equity and fixed-income revenue.

Charles Schwab Corp (NYSE:SCHW) topped the list of gainers, up more than 12% following its better-than-expected quarterly results.

Microsoft drives big tech higher after hitting record high flexing AI muscle

Microsoft (NASDAQ:MSFT) rose 4% as investors piled into the stock on AI-optimism after the tech giant said it would charge businesses $30 per user to access the tech giant’s suite of artificial intelligence tool.

The initial pricing details are “very bullish for the total addressable cloud AI market opportunity for Microsoft that could increase cloud revenue annually by 20% by 2025 based on our estimate,” Wedbush said in a note.

Tesla, Netflix race higher as earnings come into focus

Tesla Inc (NASDAQ:TSLA) and Netflix Inc (NASDAQ:NFLX) were in rally mode ahead of the quarterly results due Wednesday after the market closes.

For Tesla's quarterly results, the focus will likely be on margins following the electric vehicle maker’s recent price cuts, while investor focus on Netflix’s quarterly results will likely center on the boost to subscriber numbers as well as guidance following the streaming giant’s crackdown on password sharing.

Weaker retail sales flag slowing consumer, but July hike still in play

Retail sales rose 0.2% in June following a 0.5% gain the month prior, missing economists’ estimates for a rise 0.5% and providing further optimism that the Federal Reserve’s series of rate hikes delivered so far are starting to slow the economy.

Still, economists continue to expect the Fed to lift rates for one final time next week.

The positive retail sales figure for June suggests the economy continued to grow at a moderate pace, Desjardins said in a note, and [the] “Fed is therefore likely to announce one last 25 basis point increase in July.”