Wall Street celebrated on Tuesday after the latest results from corporate America suggested maybe the sky isn’t falling after all.
Blockbuster earnings from the likes of JPMorgan Chase and UnitedHealth sent the Dow climbing 237 points, or 0.9%.
After weeks of trying to decipher the latest developments in the trade war, the start of earnings season has allowed investors to refocus on the fundamentals.
Expectations for corporate profits have been very muted because of slowing economic growth. The IMF on Tuesday cut its 2019 global growth forecast, calling for the weakest pace since the financial crisis.
However, the big banks on the front lines of America’s economy reported mostly upbeat results on Tuesday.
JPMorgan raked in record revenue and its profit crushed expectations, despite the challenging interest rate environment. Citigroup’s results also topped estimates. And although Wells Fargo’s legal troubles drove its profit sharply lower, the scandal-ridden lender’s stock advanced after it stood by its outlook.
“The bank results were better than feared. That’s driving a lot of the optimism,” said Dan Suzuki, portfolio strategist at Richard Bernstein Advisors.
Jamie Dimon, JPMorgan’s CEO, said that American households remain “healthy” despite the recent slowdown. However, Dimon acknowledged that the consumer strength is being “offset by weakening business sentiment” and spending driven by trade tensions and “increasingly complex geopolitical risks.”
Although JPMorgan is firing on all cylinders, rival Goldman Sachs reported disappointing investment banking revenue. The Wall Street firm was hurt by slowdowns in M&A and the trouble in the IPO market. Goldman Sachs also disclosed an $80 million hit from its investment in WeWork after the former startup’s IPO imploded.
The hottest sector on Tuesday was healthcare.
UnitedHealth spiked 8%, leading the S&P 500 higher, after the nation’s largest health insurer boosted its 2019 forecast and gave an upbeat outlook for next year. It was UnitedHealth’s best day since May 2009. The news lifted rivals including CVS Health, Anthem and Cigna.