Stocks gain despite profit plummet for banks

The Dow powers ahead despite an inauspicious start to second-quarter earnings season. The Dow jumped 556 points. The S&P and Nasdaq shed early weakness to finish higher. Bank stocks were in focus after results from three top players.

Profits at JPMorgan Chase, America's biggest lender, were cut in half and it put away $10.5 billion to cover loans that could go unpaid in the future. The profit plunge, however, was smaller than anticipated, which gave the stock a modest boost.

Things were gloomier at Wells Fargo. The tarnished bank had its first quarterly loss since the financial crisis. It set aside roughly $9.6 billion to cover bad loans. Wells Fargo tumbled 4-1/2 percent.

And Citigroup saw its profits nose-dive by 73 percent and it stocked away $8 billion for potential loans-gone-bad. The stock was down as well.

O'Neil Global Advisors Chief Investment Officer Randy Watts had this takeaway from the banks:

"The three banks this morning took $28 billion in bad-loan loss provisions today; that's the highest level those three banks have done together, combined since the fourth quarter of 2008. We have not seen a lot of bad loans yet because of the stimulus but it's clear from their commentary that that's still ahead of us. The final point is that credit card spending is seeing weakness. In particular, Citigroup saw its credit card balances decline 7.4 percent. So the takeaway for investors there is consumer spending is still actually very weak."

Banks weren't the only ones with grim news. Delta Air Lines said demand for air travel has stalled and could take two years before recovering to pre-shutdown levels. The airline posted a whopping $2.8 billion loss for the quarter. Shares of Delta were grounded.