NEW YORK — JPMorgan Chase blew away a cloud of concern hanging over the banking industry Friday and set off a rally in stocks. Relieved investors drove up bank stocks, ended a six-day losing streak for the market and sent the Dow Jones industrial average up 204 points, the best day this month.
NEW YORK — JPMorgan Chase blew away a cloud of concern hanging over the banking industry Friday and set off a rally in stocks. Relieved investors drove up bank stocks, ended a six-day losing streak for the market and sent the Dow Jones industrial average up 204 points, the best day this month.
JPMorgan jumped 6 percent, the biggest gain in the Dow by far. The country’s largest bank earned $5 billion in the most recent quarter, easily beating Wall Street’s forecasts, even as it took a deeper loss from a complex trade that went wrong. The results brightened the outlook for other major banks. If JPMorgan could sustain such a hard hit and still post stronger earnings, the thinking went, maybe others could, too.
“Today is all about bank uncertainty getting resolved,” said Doug Cote, chief market strategist at ING Investment Management. “To me, that’s what is really driving the market.”
JPMorgan revealed that the loss from a derivative trade it first disclosed in May had grown to $5.8 billion, nearly triple the original estimate. Its stock shot up $2.03 to $36.07.
The bank’s underwriting business also fared better than many expected. That rubbed off on the investment banks Goldman Sachs and Morgan Stanley, driving both up more than 3 percent. Goldman jumped $3.41 to $97.43. Morgan Stanley rose 50 cents to $14.05.
The Dow gained 203.82 points to close at 12,777.09.
Wells Fargo, the other major bank reporting results Friday, said a strong pickup in lending lifted its net income 18 percent. Wells Fargo has managed to avoid problems plaguing other big banks and is now the country’s largest mortgage lender. The bank’s stock gained 3 percent, or $1.06, to $33.91.
Todd Salamone, director of research at Schaeffer’s Investment Research, said the rally in bank stocks shows investors had expected the worst. When they’re too gloomy on an industry, the slightest bit of good news can jolt their stocks up.
“The bar for earnings is set extremely low, and a lot of people have been betting against banks” he said. “The lower the bar, the easier it is for positive surprises.”
The rally swept across the stock market. Five stocks rose for every one that fell on the New York Stock Exchange, and all 10 industry groups within the S&P 500 rose, led by financial firms.
In other trading, the Standard & Poor’s 500 index rose 22.02 points to 1,356.78 and the Nasdaq composite gained 42.28 points to 2,908.47.