Street Shrugs Off JPMorgan Gain Bank posts strong Q1 earnings but investors worry about grim economic data. Strong earnings from JPMorgan Chase failed to send the market soaring Thursday morning, as investors were reminded of the rocky housing, labor and manufacturing environment.
JPMorgan Chase ( JPM - news - people ) announced its first-quarter earnings topped expectations, thanks to rising deposits, lower borrowing rates and a jump in mortgage refinancing. But it continues to see rising defaults, and its credit costs amounted to $10.0 billion.
JPMorgan's chief executive Jamie Dimon said the firm is capable of paying back its funds from the Troubled Asset Relief Program "tomorrow," but it's waiting for guidance from the Treasury Department, according to TradeTheNews.com. Dimon said funds from the TARP have become a "scarlet letter," adding that JPMorgan doesn't need to raise capital at the moment but could do so through private channels. He points out that he's started to see stability in economic activity though at lower levels than before the credit crisis.
Shares of JPMorgan rose 3.4%, or $1.09, to $33.65, in morning trading. The bank has lost 25.4% of its market value over the past 12 months. JPMorgan's success wasn't able lift the rest of the sector into positive territory, as the Financial Select Sector SPDR ( XLF - news - people ) exchange-traded fund slipped 1.0%, or 11 cents, to $10.74, and the SPDR KBW Bank ( KBE - news - people ) ETF fell 0.9%, or 16 cents, to $17.24.
JPMorgan's report was also not enough to boost the rest of the market, as the Dow Jones Industrial average lowered 0.7%, or 54.56 points, to 7,975.06. The Nasdaq composite index rose 1.0%, or 15.83 points, to 1,642.98, while the S&P 500 index eked out a gain of 0.1%, or 1.16 points, to 853.22.
On the economic front, labor, housing and manufacturing data continued to discourage. New claims for jobless benefits unexpectedly dropped last week by 53,000 to 610,000, the U.S. Labor Department reported, but continued claims continued to rise, reaching a new record of 6.0 million in the week ended April 4.
Housing market optimists were also dealt a blow after the U.S. Commerce Department reported housing starts fell 10.8% to 510,000 in March, the second lowest reading on record since 1959, after February's downwardly revised 572,000. The figure was also well below the 540,000 total anticipated by Wall Street.
JPM is strange. It trades intraday very “technically”. That is how I traded it briefly. Nobody seems to believe the validity of their earnings. Apparently, they were a product of creative accounting enhanced by the Gov. However, after hey gapped up 4 days ago they were able to advance even more. Now they go in tandem with SPX.
SPX: a contracting sinusoid (linear reg. curve, green) inside a termination rising wedge. One might say that a significant drop should happen soon. However, the market is actively engineered to stay up and there is no precipitous distribution. For OpExp THEY will not allow the market to drop since they want the shorts to be hit!
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