U.S. Stocks Waver as Banks Kick Off Earnings Season
By Anna Hirtenstein
U.S. stocks wavered Tuesday as investors parsed earnings results
from the biggest banks for insights on the health of the American
economy and its lenders.
The S&P 500 edged 0.3% lower shortly after the opening bell.
A rally in the equity market on Monday fizzled after California
rolled back some of its reopening plans, stoking fears about
The Dow Jones Industrial Average rose about 25 points, or 0.1%.
The Nasdaq Composite fell 0.5%.
Earnings season kicked off in earnest this week with the latest
quarterly results from big banks. JPMorgan's earnings beat
analysts' estimates, though the firm's results highlighted the
economic uncertainty ahead. Chief Executive James Dimon said the
bank was setting aside billions to cover potential losses on loans
to borrowers hurt by the pandemic, which crimped its profits.
Shares of JPMorgan Chase rose 0.7%.
Wells Fargo's shares declined 6.9% after it reported a $2.4
billion loss and said it intends to cut its dividend next quarter.
Citigroup slipped 2.1% after it said its revenue rose, but its
profit fell due to a higher allowance for credit-loss reserves due
to the economic downturn.
"This shows that there's a three-speed recovery in the economy,"
said Sebastien Galy, a macro strategist at Nordea Asset Management.
"Some banks will be better positioned than others" during times of
volatility, particularly in the case of JPMorgan who is a key
player in market-making.
Meanwhile, shares of Delta Air Lines shed 3% after it reported a
pretax loss of $7 billion but said it had $15.7 billion of
liquidity at the end of the quarter to help keep the company
In Europe, the pan-continental Stoxx Europe 600 slipped 1.1%,
led lower by stocks in Germany and France. Industrial production in
the eurozone is recovering slower than expected and is still more
than 20% lower than last year, according to a Tuesday data release.
A gauge of sentiment for institutional investors in July also came
in below expectations.
Fresh data showed that the U.K's economic expansion in May was
weaker than economists had expected, and output in Britain remains
around a quarter below the level it had reached in February, before
the pandemic struck and the economy was shut down. The British
pound edged down 0.3% against the dollar.
"For the U.K., it's a tough gig currently. The drop in GDP was
starker than on the continent and now the bounceback is weaker,"
said Peter Schaffrik, global macro strategist at RBC Capital
Markets. "It's a pretty big miss."
In Asia, major benchmarks slipped after tensions between the
U.S. and China rose, prompted by Secretary of State Mike Pompeo's
comments on Monday that the Trump administration formally rejects a
swath of Chinese claims in the South China Sea. China's main stocks
gauge, the Shanghai Composite Index, declined 0.8%.
In government bond markets, the yield on U.S. 10-year Treasurys
slipped to 0.612% Tuesday, from 0.638% Wednesday. Bond yields and
prices move in opposite directions.
Data Tuesday showed consumer prices in the U.S. rose 0.6% in
June, a little more than expected, according to data from the U.S.
Bureau of Labor Statistics. The increase was largely driven by an
uptick in gasoline and food prices.
Gunjan Banerji contributed to this article.
Write to Anna Hirtenstein at email@example.com
(END) Dow Jones Newswires
July 14, 2020 10:13 ET (14:13 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.