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Friday, 13 July 2012
U.S. Stocks Rise As JPMorgan Jumps Amid China Speculation
By Lu Wang and Nikolaj Gammeltoft - Jul 13, 2012 8:33 PM GMT+0400
U.S. stocks rose, snapping the longest losing streak since May for the Standard & Poor’s 500 Index, amid speculation China will boost stimulus measures and as JPMorgan Chase & Co. (JPM) rallied after reporting earnings.
JPMorgan surged 5.5 percent to lead gains in the Dow Jones Industrial Average after Chief Executive Jamie Dimon said the bank will still likely have record earnings this year even after reporting a $4.4 billion trading loss from its chief investment office in the second quarter. Wells Fargo & Co. climbed 3.2 percent after reporting a 17 percent rise in profit. Phillips 66 rallied 4.5 percent after Warren Buffett said Berkshire Hathaway Inc. has invested in the refiner.
Traders work on the floor of the New York Stock Exchange. Photographer: Jin Lee/Bloomberg
July 13 (Bloomberg) -- Gary Townsend, a founder of Hill-Townsend LLC, talks about JPMorgan Chase & Co.'s second-quarter earnings and the outlook for the bank. He speaks with Stephanie Ruhle and Scarlet Fu on Bloomberg Television's "Market Makers." William Cohan, a Bloomberg View columnist, also speaks. (Source: Bloomberg)
The S&P 500 gained 1.4 percent to 1,353.28 at 12:31 p.m. New York time, trimming its weekly loss to 0.1 percent. The index fell for six consecutive days, losing 2.9 percent amid concern over corporate earnings. The Dow added 171.84 points, or 1.4 percent, to 12,745.11 today. Trading in S&P 500 companies was down 11 percent from the 30-day average at this time of day.
“Six straight days down, the market is looking for something better,” Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co., based in Elmira, New York, said in a telephone interview. “You started with China and JPMorgan added to it. The confidence is that the trading loss is 95 percent of the way behind us. The company is on the upswing.”
Equities retreated yesterday as concern about a slowdown in the global economic recovery and American corporate earnings overshadowed a rally in Procter & Gamble Co. (PG) and homebuilders. Four out of the six S&P 500 companies that reported results this week beat analysts’ earnings estimates while one missed, data compiled by Bloomberg show. Overall, profits probably decreased 2.1 percent in the second quarter, the first drop in almost three years, according to a Bloomberg survey of analysts.
China’s growth slowed for a sixth quarter to the weakest pace since the global financial crisis, putting pressure on Premier Wen Jiabao to boost stimulus to secure a second-half economic rebound. Gross domestic product expanded 7.6 percent last quarter from a year earlier, the National Bureau of Statistics said today. The pace, a three-year low, compares with an 8.1 percent gain in the previous period and the 7.7 percent median forecast of economists.
“China’s growth is slowing, which will urge their policy makers to respond with a fiscal thrust,” Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co. which oversees about $115 billion of assets, said in a phone interview.
Equities maintained their gains even after the Thomson Reuters/University of Michigan index of consumer sentiment unexpectedly declined in July to the lowest level this year. A Labor Department report showed wholesale prices unexpectedly rose in June for the first time in four months, reflecting an increase in food costs.
All 10 S&P 500 industry groups advanced as financials jumped the most, rising 2.3 percent. The Morgan Stanley Cyclical Index of companies most-tied to the economy rallied 1.8 percent, after declining 0.9 percent yesterday.
JPMorgan surged 5.5 percent to $35.90. Net income fell to $1.21 a share from $1.27 a year earlier and the lender also restated its first-quarter earnings to show net income was $4.92 billion, rather than the $5.38 billion previously reported.
Wells Fargo (WFC) gained 3.2 percent to $33.90. Net income advanced to 82 cents a share on strength in mortgage banking and a drop in expenses. The average estimate of analysts surveyed by Bloomberg, excluding some special items, was 81 cents a share.
“The degree to which our banking system has come back, particularly compared to the European banks, is dramatic,” Buffett, the billionaire chairman of Berkshire, said today on Bloomberg Television’s “In the Loop With Betty Liu” in an interview from the Allen & Co. media conference in Sun Valley, Idaho. “Our banking system is in terrific shape and that can’t be said for banks around the world and it couldn’t be said for our banks four years ago.”
Phillips 66 (PSX) rallied 4.5 percent to $34.49. Berkshire has invested in the refining business that was spun off by ConocoPhillips this year, Buffett said.
An S&P 500 index of homebuilders climbed 2.4 percent to the highest level since May 2008. D.R. Horton Inc. jumped 3.9 percent to $19.08 after MKM Partners boosted the stock to buy from neutral, citing accelerating growth in new home sales.
P&G, the world’s largest consumer-products company, climbed 2.8 percent to $65.34. Board members are dissatisfied with Chief Executive Officer Robert McDonald’s performance and are discussing a possible leadership change, according to people familiar with the situation. P&G jumped 3.8 percent yesterday after Federal Trade Commission cleared William Ackman’s Pershing Square Capital Management LP to buy a stake, sparking speculation that he may urge the company for more asset sales.
Lexmark International Inc. (LXK) slumped 15 percent to $20.77 for the biggest retreat in the S&P 500. The maker of laser and inkjet printers said second-quarter sales and profit would be lower than it had expected due to weak demand in Europe and unfavorable exchange rates.