By Yasin Ebrahim
Investing.com – The Dow racked up gains on Tuesday, as investors weighed up the prospect of an eventual economic restart against earnings from banks that point toward further coronavirus-induced pain for the economy.
The Dow jumped 2.39%, or 559 points, theS&P 500 gained 3.06% and the Nasdaq Composite added 3.95%.
Growing signs that some of the Covid-19 hotspots in the country like New York appear to be winning the battle to slow the pandemic have increased calls for the economy to reopen, boosting investor sentiment on risk.
Gross new daily hospitalizations in New York state fell to 1,649 from 1,958 a day earlier, the lowest since March 24, with New York Governor Andrew Cuomo recently suggesting the worst of the pandemic was over.
Governors across New York, New Jersey, Connecticut, Massachusetts, Pennsylvania, Delaware and Rhode Island said they would work together on reopening plans.
But the reopening of the U.S. is unlikely to avert a widely-expected slump in global growth.
The International Monetary Fund said it now expects the global economy to contract by 3% in 2020, compared with a previous estimate for global GDP to expand 3.3% for this year.
Earnings from JPMorgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) underscored the expected economic damage that lies ahead as both banks reported a steep contraction in earnings on loan loss provisions and warned they may need to sock away more money to offset anticipated loan defaults from customers.
Bucking the trend of weaker earnings, Johnson & Johnson (NYSE:JNJ) rasied its dividend and reported a jump in profit, led by increased demand for over-the-counter medicine.
The rally on Wall Street was led by technology, with FAANG and chip stocks catching a strong bid.
Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX) and Google parent Alphabet (NASDAQ:GOOGL) rallied more than 3%.
Energy, meanwhile, proved an exception to the rally, paced by a sharp decline in oil prices just days after OPEC and its allies agreed to cut production by about 10 million barrels a day.