Wall Street Opens Higher; JPMorgan Lifts Trading Loss to $5.8 Billion

Arthi Gupta
13 Jul, 2012
New York City

U.S. indexes advanced after China reported slowing but strong GDP, industrial production and retail sales data. U.S. producer prices unexpectedly rose. JPMorgan quarterly net fell and withdrew its first quarter earnings. Wells Fargo earnings rose.

[R]9:45 AM New York – U.S. indexes advanced after China reported slowing but strong GDP, industrial production and retail sales data. U.S. producer prices unexpectedly rose. JPMorgan quarterly net fell and withdrew its first quarter earnings. Wells Fargo earnings rose.[/R]

U.S. and global indexes edged higher after China reported better-than-estimated GDP and production data and Italy completed the debt offering as targeted by the treasury.

Italy completed the debt offering of €5.25 billion from a bond sale today. And, markets largely ignored the latest two-notch downgrade of the Italian debt by a ratings agency Moody''s to Baa2 from A3 and maintained negative outlook.

China''s gross domestic product expanded 7.6% annually in the second quarter, following the 8.1% growth recorded in the first quarter, the National Bureau of Statistics said today.

Separately, the statistics office reported that growth in China''s industrial production eased unexpectedly to 9.5% in June from 9.6% in May.

Japan''s industrial output fell at a revised 3.4% monthly rate in May compared to the 3.1% decline estimated initially, according to a government report.

In another report, South Korea''s central bank lowered the growth outlook for the economy. The Bank of Korea said the gross domestic product may rise 3% in 2012, slower than the forecast of 3.5% in April.

Yesterday, the central bank cut the key interest rate by 25 basis points to 3.00% from 3.25%.

Singapore’s economy shrank in the second quarter unexpectedly by 1.1% from the previous quarter, when it grew 9.4%, according to the Trade and Industry Ministry. Manufacturing reversed its earlier growth of 21% in the previous quarter to a 6% decline.

U.S. Producer Prices Rise

U.S. producer prices rose unexpectedly in June, according to a report released by the U.S. Labor Department today.

The producer price index climbed 0.1% in June after falling 1.0% in May.

Excluding a continued drop in energy prices and an increase in food prices, the core producer index rose 0.2% in June.

United Orders Boeing Aircraft

United Continental Holdings Inc. said it will purchase 150 narrowbody Boeing 737 aircraft to reduce fuel and operating costs. The deal is valued at $14.7 billion at list prices.

Darden to Acquire Yard House

Darden Restaurants, Inc. agreed to acquire Yard House USA, Inc. for $585 million in an all-cash transaction from private equity firm TSG Consumer Partners LLC, management and investors.

Yard House currently operates 39 locations across 13 states.

Earnings Review

iGATE Corporation ((IGTE)), the outsourcing provider reported second quarter revenues increased 57.3% to $268 million from the second quarter of 2011. Net income in the quarter surged 217.5% to $12.7 million from $4 million in the quarter a year ago.

JPMorgan Chase & Co. ((JPM)), the financial services provider reported second quarter revenue, on a reported basis, fell 17% to $22.18 billion from a year earlier. Net income in the quarter dropped 8.7% to $5 billion or $1.21 per diluted share compared with $5.4 billion or $1.27 in the 2011 second quarter.

The global bank also confirmed that year-to-date losses from the failed derivative trade so far were $5.8 billion and did not specify if all the losing trades have been completely unwound. The bank also said it will restate its first quarter earnings and believes that not all traders had fairly valued all positions in the synthetic trade conducted by its investment office in London.

Webster Financial Corporation ((WBS)), the bank holding company said second quarter net income climbed 22% to $40.63 million or 44 cents per diluted share compared to $33.35 million or 36 cents per share a year ago.

Net interest income grew 2.5% to $144.38 million from $140.91 million in the prior-year quarter.

Wells Fargo & Company ((WFC)), the financial services firm reported second quarter total revenue rose 4% to $21.29 billion from the comparable period last year. Net income in the quarter rose 18% to $4.6 billion or 82 cents per diluted share from $3.9 billion or 70 cents per share, for second quarter 2011.