S&P 500, Dow rise after mixed bank earnings; tech-heavy Nasdaq falls

By Medha Singh and Devik Jain

(Reuters) - The S&P 500 and Dow indexes edged higher in volatile trading on Tuesday as investors digested a mixed bag of quarterly earnings reports from U.S. lenders but technology stocks fell on worries over new business restrictions in California.

JPMorgan Chase & Co, the largest U.S. lender, was up 0.2% after it posted a smaller-than-expected 51% drop in second-quarter profit.

Wells Fargo & Co, however, fell 5.5% after booking a quarterly loss for the first time since the 2008 financial crisis. Citigroup Inc was also down 2.5% as it reported a steep fall in quarterly profit.

The S&P 500 banks index slumped 1.6% as the three banks set aside a combined $28 billion to cover potential losses on loans to borrowers hurt by the coronavirus pandemic.

"The choppiness is very natural as we've had our fair share of gains over the last two or three weeks now," said Luis Strohmeier, wealth advisor at Octavia in Los Angeles, California.

"There's a level of uncertainty due to California temporary shutting down indoors ... because we weren't prepared for a reversal in the opening."

Wall Street has reclaimed most of its coronavirus-driven losses since March as a raft of monetary and fiscal stimulus and upbeat economic data raised hopes of a swift post-pandemic recovery.

But a recent record surge in COVID-19 cases and new business restrictions, particularly in California, have sparked a selloff in tech stocks, with the Nasdaq pulling back about 6% from its intraday record high on Monday.

Investors are bracing for what could be the sharpest drop in quarterly earnings for S&P 500 firms since the 2008 financial crisis, according to Refinitiv IBES data.

At 12:55 p.m. ET, the Dow Jones Industrial Average was up 257.51 points, or 0.99%, at 26,343.31, the S&P 500 was up 7.03 points, or 0.22%, at 3,162.25. The Nasdaq Composite was down 41.96 points, or 0.40%, at 10,348.88.

Amazon.com Inc, Adobe Inc and Facebook Inc, all three of which hit record highs in intraday trading on Monday, were some of the biggest drags on the Nasdaq.

Delta Air Lines Inc fell 2.5% as it warned it will be more than two years before the industry sees a sustainable recovery from the "staggering" impact of the coronavirus pandemic, with demand largely tracking the curve of infections in different places.

Moderna Inc rose 3.7% as it plans to start a late-stage clinical trial for its COVID-19 vaccine candidate on or around July 27.

Advancing issues outnumbered decliners by a 1.41-to-1 ratio on the NYSE and for a 1.01-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and no new low, while the Nasdaq recorded 23 new highs and 27 new lows.

(Reporting by Medha Singh and Devik Jain in Bengaluru; Editing by Shounak Dasgupta and Anil D'Silva)