Barron’s

Investors have turned their attention to corporate earnings as new Covid-19 cases have nearly tripled over the past two weeks.

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If an investor decided to stretch this past weekend into a three-day break, they have missed the fact that Covid-19 fears had morphed into a full-blown selloff Monday. But a brutal Monday gave way to a terrific Tuesday and Wednesday is looking good for stocks as well.

The reason: Strong corporate earnings are inoculating investors against a virus resurgence for now.

Over two days, it looks as if nothing has happened even though a lot has occurred. It’s been a remarkable turnaround for the market. The S&P 500 dropped 1.6% Monday only to finish up 1.5% Tuesday. For the week so far, the index is down less than 0.1%. The Dow Jones Industrial Average is faring a little worse, down 0.5%. But the Nasdaq Composite is up about 0.5%.

Rising Covid cases stoked concerns about new restrictions that might choke off economic growth. Those fears haven’t disappeared on Wednesday as new U.S. cases have nearly tripled over the past two weeks, according to the New York Times.

But strong earnings from old-tech giant IBM (ticker: IBM)and automotive lender Ally Financial (ALLY) reminded investors on Tuesday that things are still getting better. That’s continued on Wednesday, as well. Strong earnings that beat Wall Street projections from Coca-Cola (KO), Harley-Davidson (HOG), and Johnson & Johnson (JNJ) are helping with the “hold on things are still improving” theme.

Even an earnings miss from Netflix (NFLX) after Tuesday’s close couldn’t shake things up. Netflix is working through its stay-at-home problem as reopening means less time to watch TV.

Investors aren’t out of the woods yet, even if the S&P 500 and Dow are continuing to build on Tuesday’s gains. But the market only cares about what comes next. And the strong outlook from companies suggests that business remains good, Covid or not.

Write to allen.root@dowjones.com