Stocks jumped on Tuesday as investors grew more optimistic about the coronavirus outlook while bracing for the start of the corporate earnings season.
The Dow Jones Industrial Average rallied more than 300 points, or 1.5%. The S&P 500 climbed 1.9% while the Nasdaq Composite advanced 2.6%. Johnson & Johnson was the best-performing stock in the Dow while the S&P 500 was led higher by 2% rallies in tech, real estate and utilities. Amazon rose to an all-time high to lead the Nasdaq higher.
The major averages came off their session highs in mid-morning trading, as Boeing fell more than 4% on the cancellation of 150 Max jet orders.
“When you look at the facts, I think there’s reason to be more hopeful than we have been,” CNBC’s Jim Cramer said. “The worst-case scenario’s been taken off the table, and if Apple and Google can do contact tracing that we all embrace … while we continue to roll out more testing, the economy could reopen a lot sooner than we thought even, say, three weeks ago.”
President Donald Trump said in a press conference Monday that growth in new coronavirus infections stabilized, providing “clear evidence” that mitigation is working in the country.
New York Gov. Andrew Cuomo struck an optimistic tone about the outbreak in his state, the epicenter of the pandemic in the United States. He said Monday it appears that “the worst is over … if we continue to be smart going forward.” At least 10,000 people have died from the infection in the state.
“Financial markets have started to take a more positive view of the outlook,” said Jan Hatzius, chief economist at Goldman Sachs, in a note. “The initial improvement was mostly policy-driven, but the greater optimism
of the past week seems to be at least partly related to the virus itself. “
“To be clear, the health situation remains very bad in absolute terms, especially in the US which is now ahead of Italy and Spain in terms of coronavirus-related fatalities (though still much lower on a per-capita basis).”
The number of coronavirus cases continues to rise globally. Data from Johns Hopkins University shows there are more than 1.9 million cases around the world, with over 582,000 in the U.S.
The corporate earnings season kicked off on Tuesday with JPMorgan Chase and Johnson and Johnson reporting their latest quarterly results, giving investors their first look at how devastating the hit to corporations has been from the pandemic.
JPMorgan Chase reported a big profit decline for the first quarter, but the stock rose 2.2% on record markets revenue. Johnson & Jonson shares gained 3.6% on better-than-expected earnings. Analysts expect S&P 500 earnings growth to decline 10.2% in the first quarter year-over-year, according to Refinitiv. There is also an unusually wide range of estimates given the unprecedented uncertainty from the coronavirus.
Wells Fargo, meanwhile, reported first-quarter profits well short of expectations as the San Francisco-based bank set aside cash for credit losses amid the coronavirus pandemic. It reported earnings of 1 cent per share, below analyst estimates of 33 cents per share.
“Even the lowered forecast may prove optimistic given some analysts have not adjusted numbers since mid-March in response to the lockdowns in many major cities throughout the country,” said Jeff Buchbinder, equity strategist for LPL Financial.
For the first quarter, 88 negative earnings pre-announcements have been issued by S&P 500 corporations, according to Refinitiv. A wave of major companies have already withdrawn their full-year guidance.
Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.