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Wall Street Rebounds Tuesday 07/14 16:04
Wall Street rebounded on Tuesday, and the S&P 500 more than made up all its
losses from the day before, after stocks pinballed through another day of
erratic trading.
NEW YORK (AP) -- Wall Street rebounded on Tuesday, and the S&P 500 more than
made up all its losses from the day before, after stocks pinballed through
another day of erratic trading.
The S&P 500 climbed 1.3%, led by energy producers and other companies whose
profits would benefit greatly from a strengthening economy. It was a sharp
turnaround from the morning, when the index was down 0.9%, and from Monday's
last-hour slide after California shut bars and reinstated other restrictions
amid a jump in coronavirus counts.
The Dow Jones Industrial Average also erased an early loss to end the day at
26,642.59, up 556.79 points, or 2.1%. Big tech-oriented stocks lagged behind,
though, in a turnaround from their remarkably resilient run through the
pandemic. That held the Nasdaq composite to a more modest gain of 97.73, or
0.9%, to 10,488.58.
The S&P 500 added 42.30 points to 3,197.52, and six out of seven stocks in
the index were higher. The move left it 0.4% higher for the week after two
yo-yo days.
The market's latest unsettled moves came as earnings reporting season kicked
off. Three of the nation's biggest banks painted a mixed picture of how badly
the coronavirus pandemic is ripping through their businesses.
"The earnings season is off to a very guarded start," said J.J. Kinahan,
chief market strategist at TD Ameritrade.
He pointed to cautious forecasts from companies that see the economy
possibly taking a step back because of worsening COVID-19 trends, or at least
taking longer to recover than expected.
"The fact that they are prepared for bad scenarios is helping to give the
market a little confidence," he said.
Like the broader market, financial stocks drifted between gains and losses
for much of the day before turning higher in the afternoon. JPMorgan Chase,
Wells Fargo and Citigroup said they collectively set aside nearly $27 billion
during the second quarter to cover loans potentially going bad due to the
recession.
But investors took very different approaches to each of them. JPMorgan Chase
rose 0.6% after it said it made a record amount of revenue from April through
June. Its profit for the latest quarter also beat analysts' forecasts, even
though it roughly halved from a year ago.
Wells Fargo, though, dropped 4.6% after it said it expects to cut its
dividend. "Our view of the length and severity of the economic downturn has
deteriorated considerably," CEO Charlie Scharf said.
Citigroup fell 3.9% after CEO Michael Corbat said its overall business
performance was strong last quarter, though net income dropped 73% from a year
ago largely due to the $7.9 billion it set aside for loans potentially going
bad.
Delta Air Lines lost 2.6% after its earnings and revenue for the latest
quarter fell short of Wall Street's already very low expectations. The pandemic
is keeping fliers on the ground, and Delta's passenger count plunged 93% during
the quarter from a year earlier. CEO Ed Bastian said it could be two years
before the airline sees a sustainable recovery.
Stocks have been mostly churning in place since early June. That's when the
S&P 500 pulled back within 4.5% of its record high set in February, after
earlier being down nearly 34%. The index is now 5.6% below its record.
Pulling stocks higher has been a budding economic recovery, with the job
market, retail sales and other measures of the economy halting their plunge and
beginning to resume growth. Underlying it all is massive aid for the economy
from central banks and governments around the world.
But pushing stocks down are accelerating coronavirus counts in hot spots
around the world, which threatens to halt the recovery just as it got going.
California demonstrated on Monday how dangerous that can be when the governor
of the country's largest state economy ordered indoor dining and other economic
activity closed.
The worry is that the continuing pandemic could push states across the Sun
Belt to roll back reopenings of their economies.
That's why COVID-19 trends --- along with the potential for more aid for the
economy from Congress --- will matter much more for markets in upcoming weeks
than what companies say about their second-quarter results, said Keith
Buchanan, portfolio manager at Globalt Investments.
"The progression of the virus should still be front and center for what is
dictating and going to continue to dictate our prospects for economic growth
going forward," he said.
In Europe, France's CAC 40 fell 1%, and Germany's DAX lost 0.8%. The FTSE
100 in London added 0.1%.
In Asia, Japan's Nikkei 225 fell 0.9%, South Korea's Kospi slipped 0.1% and
Hong Kong's Hang Seng dropped 1.1%.
The yield on the 10-year Treasury held at 0.62% after rallying back from a
morning dip to 0.60%. It tends to move with investors' expectations of the
economy and inflation.
Benchmark U.S. crude oil rose 19 cents to settle at $40.29 per barrel. Brent
oil, the international standard, rose 18 cents to $42.90 a barrel.
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