Investors are optimistic that the administration of United States President Donald Trump may soon ease coronavirus-fuelled lockdowns despite worrying earnings reports from JPMorgan and Wells Fargo. The sentiment pushed US financial markets higher.
The Dow Jones Industrial Average rose 2.4 percent to close at 23,951.2.
The widely used gauge of US retirement and education savings accounts, the S&P 500, gained 3.05 percent.
The Nasdaq Composite Index rose 3.95 percent.
New York’s total hospitalisations fell for the first time since the onset of the novel coronavirus pandemic, Governor Andrew Cuomo said, adding, “We think we are at the apex on the plateau”.
Cuomo said 778 New Yorkers died from the respiratory illness caused by the virus in the past day, up from 671 a day earlier, which was the lowest daily toll since April 5. A total of 10,834 New Yorkers have died due to COVID-19.
The US death toll from COVID-19 stood at nearly 25,300 on Tuesday, out of more than 600,000 known US infections.
White House adviser Larry Kudlow said Trump would make a number of announcements about reopening the US economy in the next day or two as the health crisis appeared to be ebbing.
“The market is going up on prospects of the economy reopening soon and also the coronavirus [possibly] reaching some sort of peak,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
But, he said, the market could be in store for further sharp selling in the coming months as data showing the extent of the economic damage from the virus is released. “We’re going to see [macroeconomic] numbers that are going to be frightening, and that will weigh.”
Goldman Sachs chief economist Jan Hatzius put the glass-half-full sentiment into perspective, writing in a note to clients on Monday that hopeful investor attitudes are being driven by a perception that new cases of coronavirus are peaking globally, which optimists think “will allow us to reopen the economy soon”.
But Hatzius also highlighted that pessimists attribute the deceleration in new infections to social distancing, “which directly corresponds to reduced economic activity”, and he noted, “if so, any economic rebound could result in a large second wave of infections”.
Earnings season got under way in earnest on Tuesday with the largest US bank by assets, JPMorgan Chase, offering the first glimpse of the pummelling that corporate America is taking from coronavirus lockdowns.
JPMorgan Chase reported that its first-quarter profits plunged by around 70 percent. It also said it has set aside $8.3bn in reserves to shield it from a possible deluge of potential loan defaults in the months ahead as shuttered and disrupted businesses struggle to get back on their feet.
Johnson & Johnson, the consumer, drug, and medical device giant, reported better-than-expected first-quarter earnings on Tuesday, but cut its outlook for the year. The company has said it plans to start human trials of a potential vaccine for coronavirus by September and has struck a $1bn deal with the US government to create enough factory capacity to produce one billion doses.
Shares of Johnson & Johnson were up more than five percent in morning trading in New York.