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