Hi Everyone,
The stock market finished the session in the green thanks to the strong intraday rally. The Dow extended its winning streak to three days in the face of the mixed earnings reports. The Dow was up 557, or 2.1%, to 26,643, the Nasdaq gained 98, or 0.9%, to 10,489, while the S&P 500 rose by 42, or 1.3%, to 3,198. Advancing issues outnumbered decliners by a 3-to-1 ratio on the NYSE, where volume remained very light.
Traders said that while today’s session ended in a clearly bullish fashion, the market-leading tech sector remained relatively weak. As one trader explained, “The Nasdaq only managed to recover a small portion of yesterday’s drop, despite today’s broad rally, which could be a warning sign for the latter half of the week. However, the late-day rally definitely gave bulls something to cheer about.”
JP Morgan’s (JPM) revenue beat defied bearish analyst expectations and the industry trends, but it was still not enough to prop up the banking sector today. The huge credit loss reserve increases spooked investors the most. Shares of JP Morgan performed the best, finishing the day virtually unchanged, but Citigroup (C) and Wells Fargo (WFC) both suffered in the wake of their reports. Banks will likely continue to face strong headwinds in the coming quarters, even though the fears of a major wave of corporate bankruptcies might be overblown.
While the banking giants’ earnings received most of the attention today, Delta Airlines (DAL) also published its second-quarter numbers this morning. The company confirmed the devastating drop in demand, while also issuing a cautious forecast for the rest of the year, which weighed on its shares, as well as entire sector. The fact that Australian airlines, Qantas, is planning to cancel almost all of its international flights until next March also put pressure on the sector.
The U.K. announced that it will join the U.S. and ban Chinese giant Huawei from its 5G network, which could further deepen the diplomatic crisis between China and the West. Analysts fear major retaliatory steps from the Asian giant, which could cause turmoil across asset classes tomorrow, and trading activity could remain elevated compared to the seasonal average. As for earnings, United Health (UNH), Goldman Sachs (GS), and U.S. Bancorp (USB) will highlight tomorrow’s session, while bulls hope that the battered financial sector will finally get a boost.
As always, have a great evening and stay tuned!!!
Joe
