Wall Street's recent hot streak ran into a roadblock Thursday as the markets flatlined even after JPMorgan Chase became the latest financial giant to blow analysts' earnings estimates out of the water.
Today’s Markets
As of 12:34 p.m. EDT, the Dow Jones Industrial Average rose 8.32 points, or 0.13%, to 8628.84, the Standard & Poor's 500 slid 0.51 points, or 0.05%, to 932.17 and the Nasdaq Composite picked up 4.85 points, or 0.26%, to 1867.86. The consumer-friendly FOX 50 dropped 0.88 points, or 0.13%, to 690.27.
For the third-straight morning, a major company reported quarterly results that blew Wall Street’s expectations out of the water. The slew of better-than-expected results from Goldman Sachs (GS), Intel (INTC) and Thursday morning JPMorgan Chase (JPM) have allowed last week’s earnings jitters to fade away.
Aside from the JPMorgan results, the markets were influenced in by new labor data, the latest developments surrounding teetering commercial lender CIT Group (CIT) and a pullback in oil prices.
While the markets started without much life Thursday, Wall Street is still on track for huge gains this week, which would be the first weekly gain in more than a month. The Dow had climbed more than 450 points over the prior three days, including 257 points on Wednesday, amid new evidence that some of America's best companies are thriving despite the still-weak economy.
Half of the Dow's 30 members were in the green Thursday, led by Disney (DIS) and Cisco (CSCO). The index's biggest percentage losers were JPMorgan and Bank of America (BAC).
JPMorgan, which earlier this year repaid its TARP cash, reported an adjusted-quarterly profit of $2.7 billion, or 28 cents a share. The results easily beat the Street’s view of a profit of 6 cents per share.
While JPMorgan’s net revenue soared by 41%, the bank set aside more than twice as much as last year for bad loans and added another $2 billion to credit reserves. After surging in anticipation of the results on Wednesday, JPMorgan and the financial sector fell about 1% in afternoon action.
Earnings will stay in focus even after Thursday’s session as tech giants IBM (IBM) and Google (GOOG) are set to report results after the bell and financial titans General Electric (GE), Citigroup (C) and Bank of America (BAC) are slated to report Friday.
On the economic front, the Labor Department issued an encouraging unemployment report Thursday but warned that technical figures may have impacted the figures.
The government said initial jobless claims tumbled by 47,000 last week to 522,000. Economists surveyed by Dow Jones Newswires anticipated claims to have declined to 513,000. At the same time, the data showed continuing claims plunged by 642,000 -- the largest drop on record.
Also, the Philadelphia Fed said its manufacturing survey index deteriorated more than expected in July. The index tumbled from -2.2 last month to -7.5 this month, worse than the -5 expected by economists polled by Dow Jones.
Meanwhile, Wall Street appeared to be mostly unfazed to the potential collapse of CIT Group, underscoring the change in sentiment since the darkest days of the credit crisis. CIT's shares plummeted nearly 80% to new 52-week lows as talks over a government rescue fell apart overnight, increasing the chances CIT will need to file for bankruptcy, possibly as soon as this week.
In the commodity markets, crude oil cooled off after surging more than $2 on Thursday, its biggest one-day gain since June 4. In recent trading, crude was off by 43 cents a barrel, or 0.71%, to $61.11
Corporate Movers
Bank of America (BAC) is operating under a secret regulatory sanction that requires it to overhaul its board and address perceived problems with risk and liquidity management, The Wall Street Journal reported Thursday. Citigroup (C) has been operating under a similar order since last year and is negotiating an agreement with the FDIC, the paper reported.
Nokia (NOK), the world’s largest phone maker, disclosed a 66% plunge in second-quarter net income but said it sees demand bottoming out.
Marriott (MAR) weighed in with a better-than-expected 76% plunge in net income in the second quarter Thursday amid weak demand for lodging in the global recession. Citing the “very unpredictable” global business climate, the hotel declined to give an outlook, weighing on its shares.
Charles Schwab (SCHW) reported an in-line 31% drop in quarterly profit amid a 7% decline in revenue and restructuring costs.
Global Markets
European stocks rallied for the fourth-straight session. London's FTSE 100 gained 0.44% to 4365.38, France's CAC 40 advanced 1.11% to 3206.36 and Germany's DAX rose 0.79% to 4967.23.
Asian markets closed with a mixed picture overnight as Japan's Nikkei 225 climbed 0.81% to 9344.16 and Hong Kong's Hang Seng rallied 0.57% to 18361.87 but China's Shanghai Composite fell 0.15% to 3183.74.
Great Expectations: Earnings Hopes Lift Stocks
