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BUSINESSFriday 15 January 2016
Led by energy sector; JPMorgan Chase Co’s earnings
rise 9 percent, beat estimates
US stocks rebound a day after plunge
KEN SWEET
ALEX VEIGA added 88.94 points, or 2 in New York. Brent crude, a AP Business Writer
AP Business Writer percent, to 4,615. benchmark for internation- NEW YORK (AP) — Banking giant JPMorgan Chase &
Energy stocks led a broad It was the best gain for al oils, also gained 72 cents, Co. said Thursday that its fourth-quarter profits rose 9
rally in U.S. stocks Thursday, each index since Dec. 4. or 2.4 percent, to $31.03 a percent from a year earlier, helped by strong perfor-
giving the market its big- Even with the big rebound barrel in London. mance in its consumer banking division and lower legal
gest gain in over a month. day the three major U.S. The rise in crude oil led trad- expenses.
A recovery in crude oil pric- stock indexes remain down ers to pile into several big- The largest U.S. bank by assets said it earned $4.91 bil-
es helped put stocks into for the year. The Dow and name energy companies. lion, or $1.32 per share, after payments to preferred
rebound mode a day af- S&P 500 are both off about Exxon Mobil added $3.47, shareholders, compared to a profit of $4.49 billion, or a
ter the market had its worst 6 percent, while the Nas- or 4.6 percent, to $79.12, $1.19 per share, a year earlier. The results topped ana-
lysts’ forecasts, who were looking for JPMorgan to earn
Shake Shack CEO Randy Garutti, center, joined by company CFO Jeff Utz, left, and founder Danny $1.26 per share, according to FactSet.
JPMorgan’s latest results reflected similar themes CEO
Meyer, celebrate during opening bell ceremonies at the New York Stock Exchange, Thursday, Jamie Dimon and the bank’s management have been
pushing for several quarters. The bank remained fo-
Jan. 14, 2016. (AP Photo/Richard Drew) cused on cutting expenses, including through layoffs or
other headcount reductions, preparing itself for bigger
drop since September. daq is down nearly 8 per- while Chevron rose $4.14, profits once interest rates rise further, as many expect
Investors also welcomed cent. or 5.1 percent, to $85.47. will happen this year. The bank’s total employees fell 3
some encouraging com- It’s been a rocky start to “The markets in general percent year-over-year to 234,598 workers.
pany earnings. the year for stocks, reflect- needed a little dose of The bank was also impacted by a steep drop in pric-
Chevron and Exxon Mo- ing investor worries about confidence and they got it es for oil and other commodities. JPMorgan had to
bil each jumped about 5 the slowdown in China, through a firming of oil pric- modestly add to its credit reserves to cover loans to oil
percent, by far the biggest plunging oil prices and the es,” Lynch said. and gas companies, who have been struggling as oil
gains in the Dow Jones in- implications those trends Energy company Williams plunged near $30 a barrel, as well loans to metal and
dustrial average. It was may have for U.S. corpora- Cos. vaulted 34.4 percent, mining companies.
a reprieve for the energy tions. The first eight trading to lead all the gainers in the Dimon stressed that the deterioration in oil and com-
sector, which has been days of 2016 represent the S&P 500. The stock, which modities should be treated as a sign of caution, but not
battered in recent months worst start to a year in the had fallen sharply a day of extreme worry.
as crude oil prices plunged. history of both the S&P 500 earlier, rose $4.68 to $18.29. “So obviously (the U.S. economy) going to get a little
U.S. crude oil rose 2.4 per- and the Dow. It’s still down 29 percent for bit worse. We’re not forecasting a recession. We think
cent on Thursday. That slump worsened on the year. Freeport-McMo- that the U.S. economy looks pretty good at this point,”
“That all led to a little bit of Wednesday, pushing the Ran also got a boost. The Dimon said, in a call with investors.
confidence in the markets S&P 500 index into what’s mining company rose 46 Marianne Lake, JPMorgan’s chief financial officer, said
and some buyers com- known as a correction, or a cents, or 12.3 percent, to the bank is likely to set aside more money to cover oil
ing in,” said Sean Lynch, drop of 10 percent or more $4.20. and gas loans, if oil prices continue to struggle. The
co-head of global equity from a peak. All told, the S&P 500’s en- amount is small, possibly $500 million to $750 million,
for Wells Fargo Investment On Thursday, after waver- ergy stocks jumped 4.5 per- Lake said in a conference call with reporters.
Institute. “It’s been pretty ing in the first hour of trad- cent. The sector remains JPMorgan’s consumer bank, the firm’s largest division
ugly so far, year-to-date, ing, the market shifted down 6.1 percent for the by profit and revenue, reported strong results. Chase
and it’s good to see the higher and remained on year. earned $2.41 billion, up 10 percent from a year earlier.
gains, but we’ll see if they an upward track the rest of The start of the latest cor- The bank grew both deposits and loans in the quarter.
follow through (Friday.)” the day. porate earnings season Notably, auto lending was up 33 percent from a year
The Dow rose 227.64 points, Investors welcomed a pick- also helped lift the market earlier. Credit cards also did well, as customers spent
or 1.4 percent, to 16,379.05. up in the price of crude Thursday. more on JPMorgan’s credit and debit cards and lower
The average had risen as oil, which had briefly fallen JPMorgan Chase rose 1.5 delinquencies and charge-offs
much as 330 points earlier. below $30 a barrel for the percent after the bank re- The corporate and investment banking division also re-
The Standard & Poor’s 500 first time since late 2003 the ported earnings that were ported a jump in profits, but it was largely tied to lower
index gained 31.56 points, day before. It ended up ris- better than analysts ex- expenses. The volatile stock and bond markets in the
or 1.7 percent, to 1,921.84. ing 72 cents, or 2.4 percent, pected. The stock added last part of the year made trading more difficult, and
The Nasdaq composite to close at $31.20 a barrel 86 cents to $58.20. q JPMorgan reported a slight drop in both its equity and
fixed income revenues from a year ago. The division
earned $1.75 billion in the quarter compared with $776
million a year earlier.
JPMorgan cut expenses two ways in its investment
bank. Legal expenses dropped to $644 million com-
pared with $1.1 billion a year earlier and the bank’s
employee compensation expenses fell from $2.02 bil-
lion to $1.86 billion. The lower compensation expenses is
a sign the bank set aside less for year-end bonuses this
year, likely a reflection of last year’s difficult markets.
JPMorgan’s commercial bank, where a significant por-
tion of JPMorgan’s oil and gas lending business sits, was
on big drag on the bank’s results this quarter. The divi-
sion had profits of $550 million in the quarter, down from
$693 million in the quarter a year earlier. The money the
bank had to set aside for struggling oil and gas loans
was largely the cause for the drop, as commercial
banking revenue was relatively flat in the quarter.q