July 16 (Reuters) - Futures for the S&P 500 and Nasdaq advanced on Tuesday as investors reviewed new corporate earnings reports, including Bank of America, and awaited key retail sales data that could provide more clarity on the current state of U.S. inflation.

Bank of America (BAC.N), the second-largest U.S. bank, reported a second-quarter profit decline due to shrinking interest income and larger reserves for potential credit losses. Despite this, the bank’s stock gained 1% in premarket trading.

Meanwhile, Morgan Stanley (MS.N) climbed 0.9% as investors anticipated its earnings announcement before the market opens.

The blue-chip Dow (.DJI) reached an all-time high on Monday during an optimistic trading session, driven by strong expectations of a potential Federal Reserve interest-rate cut in September and heightened odds of another term for presidential candidate Donald Trump following an assassination attempt.

Russell 2000 futures surged 1% after the small-cap index (.RUT) closed at its highest level since January 2022, as investors continued to shift from tech-heavy stocks that fueled most of this year’s Wall Street rally.

The focus now turns to retail sales data, expected at 8:30 a.m. ET, which will give insight into how American consumers are responding to persistent inflation. According to Reuters' poll of economists, June retail sales are predicted to fall by 0.3% month-over-month, following a modest 0.1% increase in May.

“While US election uncertainties linger, macroeconomic policy is still the dominant factor, with recent indicators reaffirming the disinflation trend,” strategists at J.P. Morgan commented in a note.

The market viewed Monday’s remarks from Federal Reserve Chairman Jerome Powell as a dovish signal, as he indicated that recent economic data “boosted confidence” that inflation is moving closer to the Fed’s 2% target.

Traders are now betting on a Fed rate cut by September, with CME's FedWatch tool suggesting an 88% chance for a 25-basis-point reduction during that meeting.

While Trump’s potential second term was seen as bolstering equities after he survived the attempted shooting at a campaign event on Saturday, signs of caution emerged, as the "fear gauge" (.VIX) briefly spiked, hitting its highest point in three weeks.

On Monday, Trump announced Senator J.D. Vance as his running mate for the 2024 presidential race.

However, stocks related to Trump, which had climbed on Monday, took a downturn. Shares of Trump Media & Technology Group (DJT.O), Phunware (PHUN.O), and Rumble (RUM.O) fell by between 2.4% and 7.9%.

As of 6:56 a.m. ET, Dow e-minis declined slightly by 2 points (flat), while S&P 500 e-minis rose by 7.25 points, or 0.13%. Nasdaq 100 e-minis were up 40.25 points, or 0.2%.

UnitedHealth Group (UNH.N) delivered higher-than-expected second-quarter earnings. However, its stock erased early gains, dropping 1.5% following news of greater-than-anticipated medical expenses during the quarter.

Tinder parent company Match (MTCH.O) surged 7.4% following reports that activist investor Starboard has acquired over a 6.5% stake, pushing for a possible company sale if turnaround strategies fail.

Meanwhile, Tesla (TSLA.O) gained 1.6% after reports surfaced indicating CEO Elon Musk plans to commit approximately $45 million monthly to fund a new pro-Trump super PAC.