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U.S. stocks rose on Wednesday, with the S&P 500 closing above 3,000 for the first time since March 5, as the further easing of lockdowns lifted optimism for an economic recovery. Bank stocks powered the day's advance, with the S&P 500 financial index leading gains among major sectors. Shares of JPMorgan Chase & Co was the leading gainer in the financial index, rising 5.8% as the stock surged for a second day in a row.
Equity markets rallied on Wednesday, lifted by enthusiasm for the European Union's plans for a 750 billion euro ($823 billion) recovery fund, but crude prices slid on concerns about unrest in Hong Kong over Beijing's proposed national security laws. The euro edged higher against the dollar on the European Commission's proposed stimulus plan to bolster economies ravaged by the coronavirus pandemic, which boosted risk appetite and reduced demand for safe-haven bonds and gold.
The annual stress tests will be different this year, as the Fed incorporates fallout from the coronavirus crisis in its analysis.
JPMorgan (JPM) CEO, Jamie Dimon, is of the opinion that there might be a good chance of a fast economic recovery starting from the third quarter of 2020.
The head of one of the biggest banks in the world, J.P. Morgan Chase & Co., says he is optimistic about an economic rebound in the third quarter.
Asked at a financial services conference on Tuesday morning about JPMorgan Chase's (JPM) valuation, CEO Jamie Dimon answered that it was “very valuable” at its current price. That was all investors needed to hear, as shares in the nation's largest bank rocketed up by as much as 9% during Tuesday's trading, closing up 7% for the day at $95.82.Dimon's words carry weight among investors, as he famously bought $26 million in JPMorgan shares in February 2016 - a much-publicized and prescient move at what later proved to be a market trough.“I’m not trying to predict the bottom,” Dimon said yesterday, adding that “you cannot be a bank and be immune to what goes on in the world out there.” JPMorgan has previously said that its 2020 earnings will be impaired, as it expects significant loan defaults throughout the year.Dimon remarked that he is hopeful that the rest of the year will see improving fundamentals. “I give it some pretty good odds,” Dimon said. “The government has been very responsive, the Federal Reserve has been very responsive. Large companies have a huge wherewithal, hopefully we’ll keep the small ones alive long enough that most of them get back into business.”Dimon added that the Federal Reserve’s actions to prop up financial markets were like “water that fills every crevice.”Recent analyst reports have been bullish on JPMorgan. In one released last week, Susan Roth Katzke from Credit Suisse maintained a Buy rating on JPMorgan Chase & Co., with a price target of $122, even as she noted that low interest rates and an expected increase in credit losses will weigh on JPMorgan’s earnings this year and next. Overall, the Moderate Buy analyst consensus and 12-month analyst price target of $110 represents 15% upside from JPMorgan's current level. (See JPMorgan Chase & Co. stock analysis on TipRanks).Related News: Autodesk Earnings: Here’s What To Expect Today Google, Apple Roll Out Coronavirus Contact Tracing Technology Why Aurora Cannabis (ACB) Stock Looks Attractive More recent articles from Smarter Analyst: * Google Pay App May Face Anti-Trust Probe In India – Report * Trump Threatens Twitter After It Labels His Tweets "Potentially Misleading" * General Electric Surges 8% Amid Sale Of Lighting Unit To Savant * Gilead & Arcus Join Forces For 10-Year Cancer Deal, Arcus Down 15% In Pre-Market
U.S. stocks closed higher on Tuesday on optimism about the development of coronavirus vaccines and a revival of business activity, but the S&P 500 failed to hold above the key psychological level of 3,000 points. Stocks pared gains late in the session, after Bloomberg News reported the Trump administration was weighing a range of sanctions on Chinese officials, businesses and financial institutions, reinforcing comments earlier in the day from White House adviser Larry Kudlow.
(Bloomberg Opinion) -- Something strange happened in the U.S. stock market on Tuesday.No, it wasn’t that the S&P 500 crossed 3,000 for the first time in almost three months, generating a yelp of joy from the White House and groans from Wall Street veterans who remain perplexed at the seeming disconnect between financial markets and the American economy.Rather, the most unusual part of the latest rally is that bank shares clearly led the advance. As of last week, Bloomberg’s 18-company S&P 500 Banks Index was down more than 40% in 2020, trailing the broader stock market by an almost unprecedented degree since the coronavirus pandemic shut down the world’s largest economy. However, the index soared 9% on Tuesday, far and away a bigger gain than any of the other 23 industry groups. A simple ratio of this bank index to the broad S&P 500 shows the extent to which financials have been beaten down so far in 2020 relative to other segments of the stock market. The gauge fell on May 13 to a level seen only twice before in data going back three decades, both in March 2009. The banks swiftly rebounded in the following months as the U.S. recession officially drew to a close in June of that year.As investors weigh the drastic gains on Wall Street against the backdrop of widespread unemployment and shuttered small businesses on Main Street, the performance of bank stocks may prove to be a crucial barometer of whether markets can sustain their exuberance. Few analysts dispute that shares of financial companies are cheap on a relative basis — but sometimes prices are depressed for good reasons. Inexpensiveness alone isn’t a compelling enough reason to expect banks to bounce back as they did in 2009. Instead, perhaps more than any other industry, a lasting rally will come down to investors’ conviction in a sharp and sustained economic recovery.Investors have a few obvious reasons to be wary of U.S. banks. For one, long-term interest rates are near record lows while traders have started to wager on negative short-term rates, even as Federal Reserve officials repeatedly question the policy. All this points to lower net interest income, a crucial metric that reflects the spread between what a company earns on its loans and what it pays on its deposits. Meanwhile, large banks have already halted share buybacks, and minutes from April’s Federal Open Market Committee meeting revealed that policy makers are debating whether they should also restrict their ability to pay dividends to shareholders during the pandemic.Whether those downsides merit a $1 trillion wipeout, akin to the 2008 financial crisis, is not so clear cut. As Bloomberg News’s Lu Wang and Felice Maranz reported, at that time the financial industry’s earnings worsened for eight consecutive quarters, but analysts only expect profit declines to last half as long this time around. Banks are broadly considered to be well capitalized — certainly much more than they were 12 years ago when they had to be bailed out by the government. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon expressed confidence in mid-April, when the outlook was even more uncertain than today, that the biggest U.S. bank can handle “really adverse consequences.” He said on Tuesday that the U.S. could see a “fairly rapid recovery.”“The government has been pretty responsive, large companies have the wherewithal, hopefully we’re keeping the small ones alive,” he said at a virtual conference hosted by Deutsche Bank AG.It’s far too soon to declare an “all clear” on the economy, but it’s starting to look as if actions from the Fed and Congress at least helped the U.S. clear the low bar of avoiding the worst-case scenario. The numbers are still awful, especially when it comes to unemployment, but data released Tuesday showed an unexpected increase in new-home sales in April compared with those a month earlier. Broadly, Citigroup Inc.’s economic surprise index is off its lows, indicating that recent figures aren’t quite as bad as analysts expected.“The economic data have been so darn grim lately with job losses in the tens of millions that the green shoots of optimism from better consumer confidence and new home sales are welcome,” Chris Rupkey, chief financial economist at MUFG Union Bank NA, wrote on Tuesday. “We still can’t see a V-shaped recovery, but at least this is looking like the shortest recession in history which will be measured in months not years.”If that’s the case, investors will likely look back on the past few weeks as a time when bank stocks became far too cheap compared with other parts of the market. Yet Tuesday’s seemingly huge rally still leaves financial companies worth far less than before the pandemic, and it seems reasonable to expect they’ll remain that way for a while. After all, it’s anyone’s guess just how many loans will end up going bad and saddle banks with losses. There are far more moving parts to JPMorgan’s bottom line than that of, say, Netflix Inc., which fell 3% on Tuesday, the most in almost a month.It’s never a good idea to read too much into one optimistic trading day, especially coming out of a U.S. holiday weekend in which many Americans probably got a taste of “normal” pre-pandemic activities. But on its face, Tuesday looks as if it could be something of a turning point for bank shares. The follow-through will indicate if they were just too cheap to pass up, or if the economy truly is on the mend.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
DOW UPDATE The Dow Jones Industrial Average is soaring Tuesday afternoon with shares of Raytheon Technologies Corp. and Goldman Sachs seeing positive growth for the blue-chip average. Shares of Raytheon Technologies Corp.
The iconic New York Stock Exchange floor is back open for business. Here is what New York Stock Exchange President Stacey Cunningham told Yahoo Finance.
Banks might not be ordered to halt dividends but that doesn’t mean investors can rest easy. Bank dividends have been under pressure over the past two months as profits have been constrained by low interest rates and increasing loan losses. As banks have been working to conserve capital to serve struggling clients—namely by halting buybacks—there have been calls by regulators to also suspend dividends.
DOW UPDATE Behind strong returns for shares of Raytheon Technologies Corp. and Goldman Sachs, the Dow Jones Industrial Average is soaring Tuesday afternoon. Shares of Raytheon Technologies Corp. (RTX) and Goldman Sachs (GS) are contributing to the blue-chip gauge's intraday rally, as the Dow (DJIA) was most recently trading 592 points, or 2.
DOW UPDATE Led by positive momentum for shares of Raytheon Technologies Corp. and Goldman Sachs, the Dow Jones Industrial Average is soaring Tuesday morning. The Dow (DJIA) was most recently trading 665 points higher (2.
(Bloomberg) -- One of the Bank of England’s key policy makers played down the possibility of an imminent cut in interest rates below zero, saying that “reviewing and doing are different things.”Andy Haldane, the BOE’s chief economist who more than a week ago said officials were assessing negative rates, added Tuesday that policy makers weren’t ruling any options out “as a matter of principle.”“Currently we are in the review phase,” he said in an webinar hosted by the Confederation of British Industry Tuesday. His comments prompted traders to push back bets on negative rates to August of next year, compared with December 2020 last week.The scale of the recession triggered by the coronavirus pandemic has fueled a debate about the possibility that the U.K. could be the next advanced economy to introduce negative rates. BOE Governor Andrew Bailey told lawmakers last week that he has changed his view “a bit” on the subject but that the policy had received “pretty mixed reviews” elsewhere.The BOE has already cut its benchmark rate twice this year to 0.1%. Economists say taking it below zero is probably last on its list of preferred measures, with many predicting an increasing in the size of the central bank’s bond-buying program next month.Haldane said that BOE would look at negative rates’ impact on the financial sector, where they would squeeze margins between lending and deposit rates, and how they would affect confidence in the economy.The central bank could opt for a partial response by cutting the borrowing rate paid for by banks for loans taken out under its Term Funding Scheme, according to Allan Monks, an economist at JPMorgan. That could be similar to the ECB’s decision to ease the terms of its bank lending facilities.Still, that probably won’t be the BOE’s next step, he said.“If the BOE were to introduce negative rates following a review, we think it would do it transparently via the policy rate,” Monks said. “It would be simpler to communicate, probably more effective, and would deliver banks with cheaper funding at the same time.”Haldane also said economic output probably won’t bounce back as quickly as it plunged and may not return to pre-virus levels until the end of next year.Prime Minister Boris Johnson said Monday England’s outdoor markets and car showrooms will be able to reopen from June 1. All other non-essential retail outlets will be expected to be able to reopen from June 15 if the government can control the spread of the virus.“There will be, understandably, a period of prolonged caution in spending by both households and companies,” he said. The government should focus on instilling confidence to get people spending, he said, as the U.K. now appears to experiencing the paradox of thrift.Going off of the BOE’s latest projections, jobs might not return to their pre-coronavirus levels until 2022 or the following year, he said. “This is a sort of V, but it’s a fairly lopsided V” with risks to the downside, he said.(Updates to add JPMorgan comments from seventh paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
US banks will not resume their share buyback programmes until executives can see “the white of the eyes of the recovery” and they will not return to pre-coronavirus levels, warned Jamie Dimon, chief executive of JPMorgan Chase, on Tuesday. The head of America’s largest bank predicted another big provision for loan losses in the second quarter, on top of that taken earlier this year as JPMorgan braced for defaults from borrowers hit by the coronavirus crisis, although he added that the lender was also continuing to experience a boom in its trading business. Mr Dimon’s cautious tone on buybacks, during an appearance at a Deutsche Bank financial services conference, came as bank stocks were staging a powerful rally on signs of the US economy reopening.
DOW UPDATE Led by positive gains for shares of American Express and Goldman Sachs, the Dow Jones Industrial Average is rallying Wednesday afternoon. Shares of American Express (AXP) and Goldman Sachs (GS) have contributed to the index's intraday rally, as the Dow (DJIA) is trading 350 points (1.
J.P. Morgan Asset Management has partnered with Calastone, the largest global funds network, to introduce new levels of automation to money market funds via its "Morgan Money" trading platform.
DOW UPDATE The Dow Jones Industrial Average is rallying Wednesday afternoon with shares of American Express and Goldman Sachs leading the way for the index. The Dow (DJIA) was most recently trading 281 points, or 1.
The Dow Jones Industrial Average is climbing Wednesday morning with shares of Goldman Sachs and American Express seeing positive momentum for the index. The Dow (DJIA) is trading 185 points higher (0.7%), as shares of Goldman Sachs (GS) and American Express (AXP) have contributed to the index's intraday rally. Goldman Sachs's shares are up $9.16 (4.7%) while those of American Express are up $4.31, or 4.5%, combining for a roughly 92-point boost for the Dow.
DOW UPDATE Shares of JPMorgan Chase and American Express are trading higher Wednesday morning, propelling the Dow Jones Industrial Average into positive territory. Shares of JPMorgan Chase (JPM) and American Express (AXP) are contributing to the index's intraday rally, as the Dow (DJIA) is trading 112 points higher (0.
(Bloomberg) -- The $1.2 trillion leveraged loan market’s biggest players can breathe a collective sigh of relief -- at least for now.A New York judge last week dismissed a claim that a leveraged loan JPMorgan Chase & Co. and other Wall Street banks sold in 2014 could be considered a security and, as such, be subject to the same disclosure requirements as stock and bond offerings.The suit was one of the most consequential threats faced by the market for risky corporate loans during its decades-long emergence from an arcane corner of bank lending into a major asset class whose size now rivals junk bonds.The market’s main industry group and some practitioners had warned of dire consequences if loans were to be considered securities, including for collateralized loan obligations, which have become the largest buyers of the debt. They said issuing the debt would become more cumbersome and expensive, potentially depriving borrowers of needed capital.“Declaring syndicated term loans to be securities would have upended the expectations of borrowers and lenders and wreaked havoc in the large, and vitally important, market for those loans,” Elliot Ganz, general counsel for the Loan Syndications and Trading Association, said in a statement on Tuesday.Bond SimilaritiesLoans typically require lighter disclosure than bond offerings and can be arranged more quickly. They have become one of private equity firms’ favorite avenues to finance leveraged buyouts and are widely used by mid-sized companies, often as their only type of borrowing aside from bank debt.The standardization of terms across borrowers, a gradual weakening of investor protections and the growth in secondary trading of loans, however, have increasingly likened the debt to bonds over the past several years.QuickTake: How Leveraged Loans Are (and Aren’t) Like Junk BondsCritics say the loan market has grown riskier amid little oversight. Concerns have centered around the lack of public disclosures on financial information and other material events, which typically can only be accessed by pre-approved lenders. Some worry this information asymmetry makes loans less liquid during sell-offs.In its ruling, the court said that the investors who purchased the loan from JPMorgan and the other banks were sophisticated enough to know the debt would not be covered by securities laws.“It would have been reasonable for these sophisticated institutional buyers to believe that they were lending money, with all of the risks that may entail, and without the disclosure and other protections associated with the issuance of securities,” District Judge Paul G. Gardephe wrote.The suit stems from a $1.8 billion loan that JPMorgan and others arranged for Millennium Health LLC -- then owned by private-equity firm TA Associates -- and sold to investors in 2014. Within a matter of months, lenders saw the value of their loan plunge as the company disclosed that federal authorities were investigating their sales, marketing and billing practices. Millennium Health ultimately filed for bankruptcy.Investors in the loan later claimed through their trustee that the banks had misled them at the time the loan was syndicated by omitting information they had about the investigation. The defendants argued that loans aren’t securities, a loan syndication is not a securities distribution, and asked the court to dismiss the suit.The plaintiffs have the right to appeal the dismissal of the securities claims to the 2nd Circuit Court of Appeals, according to the LSTA.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.