TOPLINEThe stock market finished the day higher on Tuesday as Wall Street grows increasingly optimistic about the reopening of the economy, despite warnings from JPMorgan and Wells Fargo that loan defaults are set to skyrocket.
The Dow jumped over 500 points on Tuesday.
Johannes Eisele/AFP via Getty Images
The Dow Jones industrial average ended Tuesday up 2.4%, over 500 points, while the S&P 500 was up 3.1% and the Nasdaq Composite rose nearly 4%.
Wall Street has become more optimistic about the coronavirus outlook, with the number of new cases in the U.S. starting to level off, but tensions between state governors and President Trump have begun to emerge over when and how to reopen the American economy.
Amazon’s stock jumped nearly 6% and hit a new all-time high of $2,291 per share on Tuesday: The e-commerce giant has experienced unprecedented demand amid widespread coronavirus-related shutdowns.
Investors have also been bracing themselves for the start of corporate earnings—with profit-and-loss estimates expected to be murky—as companies indicate how much of an impact the coronavirus crisis has had on their businesses.
Earnings season kicked off with sobering revelations from both JPMorgan and Wells Fargo: both banks have socked away billions in preparation for loan defaults across their consumer and corporate business lines.
Shares of drugmaker and consumer goods company Johnson & Johnson, on the other hand, rose over 4.5% after the company beat revenue and profit estimates, raising its dividend by 6% even as it slashed its full-year forecast.
“If first impressions are to be trusted, [earnings] could be messy,” according to a recent note from Bespoke Investment Group. “This is just the tip of the iceberg, though, as the pace of reports will only pick up going forward. Despite the weakness in results, the one silver lining is that expectations couldn’t be much lower, so that should help to set the bar incredibly low.”
The International Monetary Fund on Tuesday issued another dire forecast, predicting that the global economy will suffer the worst financial crisis since the Great Depression. The “Great Lockdown” recession “will be like no other,” the IMF forecast, adding that it expects the global economy to contract by 3% this year, with a potential “partial recovery” in the cards for 2021.