US Stocks End Higher; DJIA Jumps 203.82 (1.62%) To 12777.09; J.P. Morgan, BofA Surge -- FEC

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Date Posted: 02:35:00 07/14/12 Sat
Author: DJIA Edges Out Weekly Gain After J.P. Morgan Tops Estimates
Subject: US Stocks End Higher; DJIA Jumps 203.82 (1.62%) To 12777.09; J.P. Morgan, BofA Surge

DJIA Edges Out Weekly Gain After J.P. Morgan Tops Estimates
14/07/2012 6:49AM

--Stocks end higher after J.P. Morgan earnings top expectations

--J.P. Morgan Chase shares rise after 2Q results top estimates

--China 2Q growth slowest in three years, but matches forecasts

By Chris Dieterich

NEW YORK--Financial stocks led a market surge after better-than-expected quarterly results from J.P. Morgan Chase boosted enthusiasm about earnings season and jolted the Dow from its longest slide in almost two months.

The Dow Jones Industrial Average gained 203.82 points, or 1.6%, to 12777.09. The Standard & Poor's 500-stock index advanced 22.01 points, or 1.7%, to 1356.77. Both benchmarks eked out weekly gains amid a late-session advance, and each rose for the first time in seven sessions.

J.P. Morgan rose 6% to sit atop the Dow's leaderboard after the bank reported second-quarter earnings fell from a year ago, but results exceeded expectations. Investors were watching to gauge the impact of soured outsize trading bets, which the company reported to be $4.4 billion in the second quarter.

Financial-sector stocks led all 10 of the S&P 500's sectors higher, with strong earnings by Wells Fargo lending support for the rally. Wells climbed 3.2% after the bank posted a 17% rise in second-quarter profit, as income in the bank's mortgage-banking business rose.

Fellow Dow component Bank of America rose sharply, while Citigroup, Goldman Sachs Group and Morgan Stanley also gained ground.

"There was a lot of hand-wringing over J.P. Morgan's earnings numbers," said Owen Fitzpatrick, head of U.S. equity strategy at DWS Investments. "The fact that we're seeing results that look OK is settling markets down, and people are thinking that maybe this quarter isn't going to be as bad as expected."

The Nasdaq Composite Index tacked on 42.28 points, or 1.5%, to 2908.47. Still, the technology-oriented benchmark shed 1% over the past five sessions, snapping its streak of five straight weekly gains.

Lexmark International dropped 16% after the maker of printing and imaging products lowered its outlook for second-quarter earnings, citing weaker-than-anticipated demand, particularly in Europe. Rival Hewlett-Packard fell 1.9% and was the only Dow component to lose ground.

Investors shrugged off July's preliminary reading for the Thomson Reuters/University of Michigan consumer-sentiment index, which was lower than expected. In other U.S. economic news, wholesale prices in June rose for the first time in four months, exceeding expectations, as rising prices for light trucks and food more than offset falling energy costs.

Earlier, investors had looked to China for a reading on second-quarter growth. While the gross domestic product of the world's second-largest economy decelerated to 7.6%, the slowest pace since 2009, the reading matched expectations, easing pressure across global markets.

"The data from China helped," said Jim Paulsen, chief investment officer at Wells Capital Management. "The markets were fearing worse, and the GDP number didn't fall near as far as some people felt was possible."

Friday's reading on China's economy also supplied fodder to those looking for global central banks to contribute additional stimulus measures in order to shore up growth.

"There's definitely a perception that if things get bad enough, there will be some round of easing, both domestically, and in China," said DWS's Mr. Fitzpatrick.

European markets were mostly higher, with the Stoxx Europe 600 adding 1.3%, amid China's economic reading and solid demand at an Italian bond auction. Europe's stock benchmark has risen for each of the last six weeks.

Asian markets were mostly higher following China's economic report. China's Shanghai Composite inched up less than 0.1%, while Japan's Nikkei Stock Average added 0.05% to break a six-session slide. Hong Kong's Hang Seng Index gained 0.4%.

In U.S. corporate news, Bridgepoint Education fell 25% after the company, which operates Ashford University and University of the Rockies, said Ashford is being monitored by a higher education commission to confirm that the university meets criteria for accreditation.

Cytec Industries rose 3.9% after the chemical and material technology firm predicted earnings well above analyst expectations for the second quarter.

Commodities prices were mostly higher. Crude-oil futures climbed 1.2% to settle at $87.10 a barrel, while gold futures gained 1.7% to settle at $1591.60 a troy ounce. The U.S. dollar fell against the euro and the yen. The yield on 10-year U.S. Treasury bonds inched higher to 1.500% as demand fell.

Write to Chris Dieterich at christopher.dieterich@dowjones.com

(END) Dow Jones Newswires

July 13, 2012 16:49 ET (20:49 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.

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