Second-quarter results starting streaming in last week, and mostly beat the grimmest analyst expectations. With net earnings declining 53 percent at JPMorgan Chase, 41 percent at Bank of America, 21 percent at Wells Fargo, and 10.8 percent at U.S. Bancorp; Citibank losing only $2.2 billion; and Northern Trust, PNC, and State Street showing higher year-over-year income, the free-fall in financial share prices experienced on July 14 reversed itself.

That left most shares at their painfully low valuations of the previous week, before the supposed near collapse—and presumed rescue—of Freddie Mac and Fannie Mae. Fannie’s shares were trading at $14.03 the morning of July 18, up from the low of $6.68 on July 11, but still below the $18.78 price on July 3. Freddie shares managed to nearly triple in value during the week from $3.89 on July 11 to $9.98 the morning of July 18. This compares to  $14.50 on July 3. Other financial stocks followed suit.

The party over the financial stock rally was short lived. Merrill Lynch’s bigger than expected $4.7 billion loss—and its sale 20 percent of Bloomberg back to Bloomberg for $4.425 billion—took the steam out of the broader stock rally and kept investors on alert.

Market conditions remain bleak. Consumers are under stress. Loan-loss provisions are rising. Credit losses are trending higher. Richard Davis, chairman, president, and CEO of U.S. Bancorp, says the bank’s net charge-offs in the third quarter could top the second-quarter $396-million figure “taking into account the higher level of delinquencies in residential real estate and other consumer portfolios, taking into account the decline in home values and other collateral, accounting for the continued stress in home building an related industries, adding the impact of higher gas and commodity prices on consumers and businesses, and finally the general stress in the economy,” according to last week’s earnings call with analysts. It doesn’t look like a bottom yet.

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