US stocks climbed Tuesday as Wall Street once more grew optimistic about the trail of coronavirus crisis while grappling with grim earnings reports from major companies.
The Dow Jones industrial average jumped as many as 649.81 points, or 2.7 percent, following a 1.4 percent drop Monday. The S&P 500 posted a gain as large as 2.9 percent, while the tech-heavy Nasdaq rose the maximum amount as 3.4 percent.
The rally came after governors in several US states said they might form plans to reopen their economies once the virus dies down. Those included ny , where Gov. Andrew Cuomo said “the worst is over” if the state keeps up restrictions to curb the virus.
“This phase we’re in now’s easing the restrictions, trying to urge the economy — albeit on a really slow path — to start to open,” said Quincy Krosby, chief strategist for Prudential Financial.
“The focus within the market is on this next phase,” she added.
Investors also got excellent news from abroad. New data showed exports and imports shrinking but expected in March following the outbreak there. And European countries like Spain and Austria have let some businesses return to figure after tough lockdowns.
Investors will gauge the security of restarting the economy by seeing whether countries see second waves of infections after loosening restrictions, consistent with Krosby.
“No doubt, the approaching weeks will still be deeply troubling for several of those countries but if we are now positioned within the latter a part of the bell curve, we will start to imagine life after the lockdown which is what investors have craved for weeks,” Craig Erlam, senior currency analyst at OANDA, said during a commentary.
Wall Street also digested mixed first-quarter results from JPMorgan Chase, Wells Fargo and Johnson & Johnson, which began the company earnings season on Tuesday.
Shares in JPMorgan and Wells Fargo posted early gains but tumbled after the banks revealed their profits plunged as they squirreled away billions of dollars to weather the coronavirus storm. JPMorgan shares were off 3.6 percent at $94.60 as of 11:54 a.m. while Wells Fargo’s were recently down 4.3 percent at $30.08.
“The banks are just quite guessing at what their earnings really are once they take reserves for potential future loan losses,” said Eric Marshall, director of research at Hodges Capital Management. “I think the truth of the unknown may have set in with investors this morning.”
Pharmaceutical giant Johnson & Johnson’s shares climbed 4 percent at the open after it posted expectation-beating profits but cut its forecast for the year due to the coronavirus crisis. The stock was recently up 4.2 percent at $145.65.
As more companies drop earnings reports within the coming weeks, investors will look to balance sheets quite profits and losses to take stock how well equipped firms are to urge through the pandemic, consistent with Marshall.
“The big question are going to be what sort of visibility that companies have into their business and what quite liquidity they need on the record to form it through whatever disruptions have occurred,” he said.
