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Where does the U.S. stimulus money come from? Here’s how the Federal Reserve is saving the economy from the COVID-19 crisis.

USA TODAY

Stocks finished sharply higher Tuesday in another volatile day of trading. Investors looked past a surge in coronavirus cases to monitor the health of the U.S. economy with the start of corporate earnings season. 

The Dow Jones industrial average climbed 556.79 points to 26,642.59, notching gains for the third consecutive day on strong gains in UnitedHealth Group and Caterpillar.

The Standard & Poor’s 500 rose 1.3% to 3,197.52, recouping losses after the broad index gave up all of its gains in a volatile final hour of trading Monday. Tuesday’s rally was driven by broad gains in shares of energy, materials, industrial, health-care and consumer-staples companies. 

The Nasdaq Composite climbed 0.9% to 10,488.58, after big tech-oriented stocks turned in mixed performances earlier in the day. 

JPMorgan Chase, the nation’s largest bank by assets, rose 0.6% as it reported making a record amount of revenue from April through June. Its profit for the latest quarter also managed to beat analysts’ expectations, even though it roughly halved from year-ago levels.

Still, the pandemic is weighing heavily on the financial health of the bank, with the company setting aside billions in the second quarter to cover potential losses from all the businesses and consumers who are unable to pay their debts due to the slumping economy.

Stocks have swung sharply in recent weeks, sometimes within a single day. Investors are navigating through a “zone of uncertainty” as the outlook for corporate earnings remains elusive, according to Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. 

“Fresh outbreaks of virus cases are occurring in the majority of U.S. states, delaying and rolling back economic reopenings,” Sandven said in a note, adding that the firm anticipates more market volatility on the horizon. “The duration and impact of COVID-19 remains unknown, and the path toward normalcy requires more time and is subject to much uncertainty.”

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Wells Fargo, meanwhile, turned in its first quarterly loss since the financial crisis after the bank set aside $8.4 billion in loan loss reserves tied to the pandemic. The stock shed 4.6%. 

Citigroup’s quarterly profit slid 73% as the bank set aside money for a potential rise in loan defaults from the pandemic. Shares fell 4%.

Global markets have been getting a painful reminder of the threat the pandemic poses to the economy, as reopenings bring on fresh spikes in coronavirus cases.

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The U.S. has surpassed 3.3 million cases with over 135,000 deaths, according to Johns Hopkins University. Globally, there have been 12.9 million cases and more than 570,000 deaths.

If governments continue to bring back restrictions to slow the outbreak’s resurgence, it could choke off the fragile economic improvements just as they get underway.

Earnings for S&P 500 companies are expected to drop a staggering 44.6% in the second quarter from a year ago, according to FactSet. That would mark the biggest decline since the fourth quarter of 2008 during the height of the financial crisis. 

The White House’s decision to reject nearly all Chinese maritime claims in the South China Sea added to investor jitters. The world’s two largest economies have been sparring over everything from the pandemic to human rights.

In a bit of encouraging news, China’s trade improved in June, a sign the world’s second-largest economy, where the pandemic all started, is recovering. But its exporters face threats including tensions with Washington and weak demand amid the pandemic.

Chinese imports rose 3%, while exports edged up 0.4%. They had both contracted in May. Manufacturing is recovering in China, but consumer spending remains weak.

The yield on the 10-year Treasury dipped to 0.61 from 0.62% late Monday. 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.

In Europe, France’s CAC 40 fell1%, while Germany’s DAX fell 0.8%. Britain’s FTSE 100 ticked up 0.1%. Japan’s benchmark Nikkei 225 sank 0.9%. South Korea’s Kospi lost 0.1%, while Australia’s S&P/ASX 200 dropped 0.6%.

Contributing: The Associated Press

Read or Share this story: https://www.usatoday.com/story/money/2020/07/14/dow-stocks-fall-jpmorgan-chase-wells-fargo-kick-off-earnings-season/5433770002/

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