Stocks spent much of the morning searching for direction following mixed reports from three of the nation's biggest banks. 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. The Dow managed to post a strong gain, while the S&P and the Nasdaw saw more modest advances.
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.
In Fed news, Federal Reserve Governor Lael Brainard said in a speech that the COVID-19 contraction is "unprecedented" for its severity and speed, and that the recent resurgence in cases is a "sober reminder" that the pandemic remains the key driver of the economy's course. "A thick fog of uncertainty still surrounds us, and downside risks predominate," Brainard said.
In other COVID-19 news, Arizona reported a daily increase of 4,273 cases, Nevada reported an increase of 1,104 confirmed cases, and California reported a daily spike of 7,346 cases. Meanwhile, Florida reported 291,629 COVID-19 cases, up form 282,435 yesterday.
TOP NEWS: Shares of Wells Fargo (WFC) finished 4.6% lower 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.
JPMorgan (JPM), in contrast, gained 0.6% after the bank 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. Following the research note, Spotify announced that it launched in 13 new markets across Europe, bringing the total number of markets to 92. The service is now available in Albania, Belarus, Bosnia and Herzegovina, Croatia, Kazakhstan, Kosovo, Moldova, Montenegro, North Macedonia, Russia, Serbia, Slovenia, and Ukraine.
MAJOR MOVERS: Among the noteworthy gainers was Rigel Pharmaceuticals (RIGL), which rose almost 91% after the company announced an investigator-sponsored trial being conducted by Imperial College London to evaluate the efficacy of fostamatinib for the treatment of COVID-19 pneumonia. Also higher was Endurance International (EIGI), which gained 26.7% after reporting upbeat preliminary Q2 revenue.
Among the notable losers was Equillium (EQ), which dropped over 47% after filing a $150M common stock sales agreement with Jefferies. Also lower was Verrica Pharmaceuticals (VRCA), which fell 3.8% after receiving a Complete Response Letter from the FDA regarding the NDA for VP-102.
INDEXES: The Dow rose 556.79, or 2.13%, to 26,642.59, the Nasdaq gained 97.73, or 0.94%, to 10,488.58, and the S&P 500 advanced 42.30, or 1.34%, to 3,197.52.
Wells Fargo
-1.18 (-4.64%)
JPMorgan
+0.61 (+0.62%)
Citi
-2.125 (-4.07%)
Delta Air Lines
-0.71 (-2.65%)
Spotify
+1.475 (+0.56%)
Rigel Pharmaceuticals
+1.96 (+90.32%)
Endurance
+1.03 (+26.08%)
Equillium
-13.1 (-48.43%)
Verrica Pharmaceuticals
-0.32 (-3.64%)