Even better-than-expected third-quarter earnings for two of the nation’s biggest banks couldn’t bolster stocks Tuesday, as the lack of productive stimulus negotiations and an unexpected blow to one coronavirus vaccine candidate weighed on the broader market.
The three major indexes ended the day down, with the S&P 500 and Dow Jones Industrial Average each falling .6%, while the tech-heavy Nasdaq ticked down .1%.
Initially boosted by a blowout earnings release, JPMorgan shares shed 1.6% despite reporting results that shattered Wall Street expectations; the firm’s net income of $9.4 billion more than doubled the previous quarter’s profit and even came in higher on a year-over-year basis.
Citigroup on Tuesday also beat analysts’ expectations before the opening bell, posting a $3.2 billion profit in spite of increasingly expensive credit costs ahead of a major management transition in February.
Meanwhile, shares of Johnson & Johnson, which also reported better-than-expected financials on Tuesday, fell 2.3% after the firm revealed it’s halted all Covid-19 vaccine trials due to a participant falling unexpectedly ill.
Delta Air Lines reported a massive $5.4 billion loss in the third quarter after spending billions on buyouts for employees and restructuring its fleet.
Cruise stocks were among Tuesday’s worst performers, with shares of America’s three largest cruise liners falling the most out of any other S&P 500 stocks.
The coronavirus pandemic has been a boon for stocks in software, biotech and consumer staples, but it’s been terrible to a bevy of firms reporting this week, particularly in the banking and airline spaces. In JPMorgan’s third-quarter earnings call on Tuesday before the opening bell, Chief Financial Officer Jennifer Piepszak said that despite the firm’s blowout earnings, it’s still heavily weighing its downside scenarios as economic uncertainty remains high outside of the short term—especially with regards to future stimulus, which experts have been saying for months is key to a sustained economic recovery.
“In many respects, the economy’s recovery since this spring has been pretty remarkable. . . . Consensus estimates show an expectation that earnings reach new highs in the second half of 2021, perhaps not so coincidentally aligned with estimates for vaccine delivery,” investment management firm Glenmede said in a note on Monday. “Consumers are driving the pandemic recovery, but the U.S. economy is not completely out of the woods yet. There are pockets of the economy that continue to struggle, and an additional round of fiscal stimulus could put the U.S. economy on a gentler and less painful path toward full recovery once a vaccine becomes widely available.”
What To Watch For
Earnings season is just getting started. Among firms that reported Tuesday were Delta Air Lines, JPMorgan Chase, Citigroup, BlackRock and Johnson & Johnson–all before the opening bell. Bank of America, Wells Fargo, Progressive and United Airlines are slated to release earnings on Wednesday, while Morgan Stanley, Charles Schwab and Walgreens are scheduled for Thursday.
Global markets were also struggling to post gains on Tuesday: The United Kingdom’s FTSE 100 finished the day down .5%, and France’s CAC 40 fell .6%, while Japan’s Nikkei TK ended the day up .2%.
JPMorgan, Nation’s Largest Bank, Posts $9.4 Billion Profit–Shattering Wall Street Expectations Despite Pandemic (Forbes)
Delta Posts $5.4 Billion Loss As Fate Of Struggling U.S. Airlines—And Airline Aid—Remains Uncertain (Forbes)
Citigroup Pulls In $3.2 Billion In Profit As Banks Beat Expectations (Forbes)
77% Of Economic Activity Lost To Social Distancing Is Back, But An Economic Recovery Still Depends On A Vaccine (Forbes)