S&P 500 Rally of 1.6% Cuts Weekly Losses, World Markets Rebound

Bikram Pandey
13 Jul, 2012
New York City

U.S. indexes surged more than 1% and banks were in focus after JPMorgan said that the bank is still poised to have record annual earnings despite a trading loss of $4.4 billion. China reported economic growth slowed for the sixth quarter in a row but met the lowered expectations.

[R]3:05 PM New York – U.S. indexes surged more than 1.3% and banks were in focus after JPMorgan said that the bank is still poised to have record annual earnings despite a trading loss of $4.4 billion. China reported economic growth slowed for the sixth quarter in a row but met the lowered expectations and pushed aside global economic worries for now.[/R]

U.S. indexes advanced after China reported slowest economic growth since the financial crisis in 2008 but met the expectations of most economists.

The U.S. indexes traded higher despite the consumer confidence index declined in July and a surprise increase in wholesale prices in June.

Stocks were also supported by a surge in banks after JP Morgan Chase reported 9% decline in profit and said losses linked to failed derivative trade has reached $5.8 billion and the bank will restate first quarter earnings.

In corporate news, JPMorgan second quarter net declined 9% to $5 billion and restated first quarter net income. Lexmark cuts second quarter outlook. Wells Fargo second quarter net soared 17% to $4.6 billion and agreed to pay $175 million to settle racial biases in mortgage approval.

The European indexes gained after China reported GDP that met expectations and Italy sold €5.25 billion of debt today at lower borrowing costs despite a credit rating downgrade. Pernod Ricard agreed to sell certain brands and assets for €103 million.

French retail sales rebounded, Spanish consumer price inflation remained unchanged but Swiss producer and import price index fell in June. Hungarian output declined and Czech current account slipped to deficit in May.

The UK indexes extended advance after the Bank of England launched a scheme to boost lending to the economy. The UK leading index dropped 0.8% and Irish surplus rose slightly in May. Global indexes rose after China reported growth.

Stocks in Tokyo edged higher after China reported a raft of economic data that at least for now pushed aside the prospect of a global economic slowdown. Japan revised its industrial output rate to 3.4% in May. Dentsu dropped 7% on the worries that it may have overpaid for the UK based Aegis purchase.

Australian stocks rebounded on the hopes that the sustained economic advance in China will keep the exports of commodities to the nation flowing. Resources linked stocks gained after commodities and the dollar edged up.

Commodities, Bonds and Currencies

The yield on 10-year bond traded higher at 1.50% and on 30-year bond increased to 2.59%.

The U.S. dollar inched lower to $1.22 to a euro and decreased against the Japanese yen to 79.19 yen.

Immediate delivery futures of Texas crude oil increased $1.36 to $87.44 a barrel and Brent crude gained $2.22 to $103.29, futures of natural gas gained 0.01 cents to $2.89 per mbtu and gasoline price increased 1.99 cents to 282.61 cents a gallon.

In metals trading, copper increased 9 cents to $3.50 per pound, gold surged $27.70 to $1,593.00 per ounce and silver decreased 4 cents to $27.06.