US stocks finished sharply higher Tuesday even as America’s leading banks warned the economic recovery from the pandemic will be choppy.
The Dow climbed 557 points, or 2.1%.The S&P 500 jumped 1.3%.The Nasdaq climbed nearly 1%.
Markets ended the day near session highs, rebounding from early losses that hit tech stocks.
US banks kicked off earnings season on a cautious note.
JPMorgan Chase, the nation’s largest bank, said it’s preparing for double-digit unemployment through the first half of 2021 — far worse than the Federal Reserve’s projection for the unemployment rate to drop to 9.3% by the fourth quarter of this year. JPMorgan reported a 51% plunge in second-quarter profits as provisions for credit losses spiked.
Wells Fargo dropped 5% after posting its first quarterly loss since the 2008 financial crisis. The bank warned it will likely slash its dividend by 80%.
Markets have boomed since late March largely because of the unprecedented rescue effort mounted by the Federal Reserve. The Fed’s easy money policies, including slashing interest rates to zero and buying vast amounts of bonds, are essentially forcing investors to bet on risky stocks.
That stimulus from the central bank has largely overshadowed concerns about the shape of the economic recovery. At least for now.