Stocks spent much of the morning searching for direction following the first salvo of earnings reports from the nation's biggest banks, although the major averages are all trending higher near noon. In addition to earnings season beginning in earnest with the release of the first bank reports today, a variety of cross-currents are at play as California's announcement of a reversal of reopenings rattled Wall Street yesterday and U.S.-China tensions continue to be an area of concern.
ECONOMIC EVENTS: In the U.S., the Consumer Prices Index rose 0.6% in June, with the core rate 0.2% higher, both of which point to hotter than expected inflation.
TOP NEWS: Shares of Wells Fargo (WFC) are 5% lower at midday after the bank reported worse than expected losses, lower than expected revenues and said it expects to reduce its third quarter 2020 common stock dividend to 10c per share from 51c per share. Wells Fargo CEO Charlie Scharf, who said he is "extremely disappointed in both our second quarter results and our intent to reduce our dividend," added that the firm's "view of the length and severity of the economic downturn has deteriorated considerably from the assumptions used last quarter."
JPMorgan (JPM), in contrast, reported better than expected earnings and revenue, noting that record Markets revenue and Investment Banking fees in the Corporate & Investment Bank "more than offset" interest rate headwinds and reduced consumer activity.
Citi (C) similarly reported better than expected earnings and revenues that increased 5% from the prior-year period, which it said was primarily reflective of higher revenues in Fixed Income Markets and Investment Banking, partially offset by lower revenues in Global Consumer Banking.
In non-bank earnings news, Delta Air Lines (DAL) reported adjusted earnings and revenue that missed consensus forecasts as its passenger revenues declined 94% from the same period of last year on 85% lower capacity. However, Delta CFO Paul Jacobson said the company removed more than 50% from its adjusted cost base in the June quarter and expects to achieve a similar 50% year-over-year reduction in the September quarter despite a sequential increase in capacity.
Among notable research, UBS analyst Eric Sheridan double-downgraded shares of Spotify (SPOT) to Sell, saying the 47% run-up in the stock price over the past month is pricing in the "entirety of upside optionality" from growth in podcasting that the analyst modeled in the coming years.
MAJOR MOVERS: Among the noteworthy gainers was Rigel Pharmaceuticals (RIGL), which rose 65% after the company announced an investigator-spononsored trial being conducted by Imperial College London to evaluate the efficacy of fostamatinib for the treatment of COVID-19 pneumonia. Also higher was Endurance (EIGI), which gained 20% after reporting upbeat preliminary Q2 revenue.
Among the notable losers was Equillium (EQ), which dropped 49% after filing a $150M common stock sales agreement with Jefferies. Also lower was Verrica Pharmaceuticals (VRCA), which fell 7% after receiving a Complete Response Letter from the FDA regarding the NDA for VP-102.
INDEXES: Near midday, the Dow was up 284.25, or 1.09%, to 26,370.05, the Nasdaq was up 4.88, or 0.05%, to 10,395.73, and the S&P 500 was up 13.22, or 0.42%, to 3,168.44.
Wells Fargo
-1.17 (-4.60%)
JPMorgan
+0.45 (+0.46%)
Citi
-1.16 (-2.22%)
Delta Air Lines
-0.91 (-3.39%)
Spotify
-4.31 (-1.65%)
Rigel Pharmaceuticals
+1.36 (+62.67%)
Verrica Pharmaceuticals
-0.67 (-7.61%)
Equillium
-13.8 (-51.02%)
Endurance
+0.76 (+19.24%)