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JPMorgan ( JPM ), Citi, Wells Fargo ( WFC ) drop after results

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Small-, mid-cap stocks lead gains

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U.S. producer prices rise marginally in June

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Indexes up: Dow 0.90%, S&P 0.90%, Nasdaq 1.1%

(Updated at 11:53 a.m.)

By Medha Singh and Ankika Biswas

July 12 (Reuters) -

The Dow touched a record high on Friday as this year's

lagging stocks gained favor on optimism that the U.S. Federal

Reserve will begin easing monetary policy in September, while

big lenders fell after reporting mixed results.

JPMorgan Chase's ( JPM ) second-quarter profit increased on

a boost from rising investment banking fees. However, shares of

the world's largest bank dipped 0.1% after a 21.4% climb this

year.

Wells Fargo ( WFC ) slid 6.8% as the lender missed estimates

for quarterly interest income, while Citigroup ( C/PN ) fell 1.7%

even after it posted a surge in investment banking revenue.

The S&P 500 Financials index shed 0.5%, while the

banks index lost 1%.

"Bank earnings were a mixed bag to start off earnings season

but buyers are still stepping in. That rotation into small- and

mid-caps is still continuing and that's a positive sign

overall," said Ryan Detrick, chief market strategist at Carson

Group.

As the S&P 500 and the Nasdaq hover near record highs,

investors are hoping for strong profit growth from companies

beyond tech heavyweights such as Nvidia ( NVDA ), so that the

U.S. stocks rally can broaden out.

Analysts expect second-quarter earnings for S&P 500

firms to grow by 9.6%, from a decline of 2.8% in the same period

in 2023, according to LSEG IBES data.

The small-cap Russell 2000 rose 1.4% to hit a

six-month high, while the S&P 400 Mid Cap index firmed

1.5%. The two indexes have lagged the S&P 500 this year.

"We think the rotation into the underloved,

underappreciated, underperforming small- and mid-caps could take

the baton in the second half of this year, as the Fed is clearly

more dovish than they've been," Detrick said.

At 11:53 a.m. ET, the Dow Jones Industrial Average

was up 338.69 points, or 0.85%, at 40,092.44, the S&P 500

was up 51.08 points, or 0.91%, at 5,635.62, and the Nasdaq

Composite was up 199.34 points, or 1.09%, at 18,482.75.

Data showed producer prices were slightly

hotter-than-expected in June but that did little to change bets

on the first rate cut in September. The report follows data

showing a surprise fall in U.S. consumer prices on Thursday.

Traders are now betting on a 94.4% chance of a rate cut by

September, up from 77.7% a week ago, according to CME Group's

FedWatch.

All three major indexes were headed for weekly gains, with

the Dow looking at its best week in nine.

In a mixed session for megacap stocks, Apple ( AAPL ) rose

1.9%, while Meta Platforms ( META ) shed 1.3%.

Tesla jumped 3.5% after a more than 8% slide on

Thursday, following a report of its robotaxi launch delay.

Advancing issues outnumbered decliners by a 4.24-to-1 ratio

on the NYSE, and by a 2.84-to-1 ratio on the Nasdaq.

The S&P index recorded 54 new 52-week highs, while the

Nasdaq recorded 149 new highs and 24 new lows.