Tuesday’s Stock Market Open: US Equities Slip As Big Banks Release Second Quarter Earnings

Update: 12:05 p.m. EDT:

U.S. stocks turned mixed, Dow turned higher, as of noon Tuesday.

The Dow Jones Industrial Average gained 296.69 points to 26,382.49, while the S&P 500 gained 11.59 points to 3,166.81 and the Nasdaq Composite Index tumbled 20.5 points to 10,370.34.

In Europe markets finished mixed, as Britain’s FTSE-100 edged up 0.6%, while France’s CAC-40 tumbled 0.96% and Germany’s DAX dropped 0.8%.

Original story:

U.S. stocks fell on Tuesday as traders digested a slew of corporate earnings reports for the second quarter.

The Dow Jones Industrial Average slipped 26.46 points to 26,059.34, while the S&P 500 dropped 14.19 points to 3,141.03 and the Nasdaq Composite Index tumbled 72.47 points to 10,318.37.

U.S. megabank JP Morgan Chase (JPM) posted better-than-expected second quarter earnings of $1.38 per share on revenues of $33 billion.

Citigroup (C) also posted better than expected second-quarter results.

But Wells Fargo (WFC) posted a net loss of $2.4 billion in the second quarter and set aside $8.4 billion in loan loss reserves due to the coronavirus pandemic. Wells Fargo also cut its dividend to $0.10.

Corporate profits are expected to plunge by 44% in the second quarter, according to Refinitiv, with the financial sector is expected to see profits plummet by more than 52%.

“What’s so influential about the banks reporting early in the earnings season in times like these is we’re really counting on banks’ management team’s view on what’s going on,” said Susan Schmidt, head of U.S. equities at Aviva Investors. “Banks are the foundation of our U.S. economy. They are there to provide loans to small businesses and to manage the retail consumers’ deposits.”

U.S. consumer price index gained by 0.6% in June, more than expected. Core CPI increased by 0.2%.

Worries over covid-19 and related lockdowns persist.

California Gov. Gavin Newsom ordered some indoor businesses in his state, including restaurants, bars, movie theaters and museums, to close again amid rising infections.

Charles Diebel, head of fixed income at Mediolanum International Funds of Dublin, Ireland warned: “The real worrying aspect for the market really is that the rise in U.S. infections will make people behave like a lockdown even if they are opening up.”

Schmidt of Aviva added: “I think what we’re seeing here [in the stock market] is the ongoing push-pull between the rising cases of coronavirus versus the states reopening the economies and the market is grappling with the balance and how that will work out over time.”

The National Federation of Independent Business’ Small Business Optimism Index rose by 6.2 points to 100.6 in June.

"We're starting to see positive signs of increased consumer spending, but there is still much work to be done to get back to pre-crisis levels," NFIB's chief economist Bill Dunkelberg said.

Overnight in Asia markets finished lower, as China’s Shanghai Composite index slipped 0.83%; Japan’s Nikkei-225 fell 0.87%; and Hong Kong’s Hang Seng exchange dropped 1.14%.

In Europe markets traded lower, as Britain’s FTSE-100 fell 0.6%, while France’s CAC-40 tumbled 1.86% and Germany’s DAX dropped 1.72%.

Crude oil futures fell 2% at $39.30 per barrel, Brent crude dropped 1.47% at $42.09. Gold futures slipped 0.89%.