U.S. Stocks Jump; DJIA Poised to Snap Six-Session Slide -- FEC

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Date Posted: 02:36:44 07/14/12 Sat
Author: was slowest in three years but matches forecasts (-China's second-quarter growth)
Subject: U.S. Stocks Jump; DJIA Poised to Snap Six-Session Slide

U.S. Stocks Jump; DJIA Poised to Snap Six-Session Slide
14/07/2012 5:45AM

--Stocks are higher following J.P. Morgan Chase's earnings beat

--J.P. Morgan shares rise after second-quarter results top estimates

--China's second-quarter growth was 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 & Co. (JPM) boosted enthusiasm about earnings season and jolted the Dow Jones Industrial Average from its longest slide in almost two months.

The Dow Jones Industrial Average was rallying 191 points, or 1.5%, to 12765 in recent trading Friday afternoon. The Standard & Poor's 500-stock index advanced 21 points, or 1.6%, to 1356. Both benchmarks flirted with weekly gains as stocks extended their advance late in the session.

J.P. Morgan sat atop the Dow's leader board, up 5.8%, after the bank reported second-quarter earnings results that were lower than a year ago but better than expectations. Investors were watching closely to gauge the impact of soured outsize bets on certain corporate-credit indexes, 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 & Co. (WFC) lending support for the rally. Wells climbed 3% 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 Corp. (BAC) climbed, while Citigroup Inc. (C), Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) 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 O.K. 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 35 points, or 1.2%, to 2901. Still, the technology-heavy benchmark was set to break a streak of five-straight weekly gains, losing 1.2%.

Lexmark International Inc. (LXK) 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 Co. (HPQ) fell 2.1% 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 speed 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 form 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 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 relief over China's economic reading of 7.6% 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 0.1% to break a six-session slide. Hong Kong's Hang Seng index gained 0.4%.

Bridgepoint Education Inc. (BPI) fell 24% 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 Inc. (CYT) rose 4.3% after the chemical and material technology firm predicted earnings well above analyst expectations for the second quarter.

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

(END) Dow Jones Newswires

July 13, 2012 15:45 ET (19:45 GMT)

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

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