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Market Recap: Stocks Finally Break Losing Streak

Market Recap: Stocks Finally Break Losing Streak

Markets closed up today:

▲ Dow: +1.62 percent

▲ Nasdaq: +1.48 percent

▲ S&P: +1.65 percent

Precious metals:

▲ Gold: up +1.02 percent to $1,588.57 an ounce

▲ Silver: up +0.34 percent to settle at $27.25


▲ Oil: +1.49 percent

Markets were down because:

JPMorgan Chase blew away a cloud of concern hanging over the banking industry Friday and set off a rally in stocks. Relieved investors drove up bank stocks, ended a six-day losing streak for the market and sent the Dow Jones industrial average up 204 points, the best day this month.

JPMorgan jumped 6 percent, the biggest gain in the Dow by far. The country's largest bank earned $5 billion in the most recent quarter, easily beating Wall Street's forecasts, even as it took a deeper loss from a complex trade that went wrong. The results brightened the outlook for other major banks. If JPMorgan could sustain such a hard hit and still post stronger earnings, the thinking went, maybe others could, too.

JPMorgan revealed that the loss from a derivative trade it first disclosed in May had grown to $5.8 billion, nearly triple the original estimate. Its stock shot up $2.03 to $36.07.

The bank's underwriting business also fared better than many expected. That rubbed off on the investment banks Goldman Sachs and Morgan Stanley, driving both up more than 3 percent. Goldman jumped $3.41 to $97.43. Morgan Stanley rose 50 cents to $14.05.

The Dow gained 203.82 points to close at 12,777.09.

Wells Fargo, the other major bank reporting results Friday, said a strong pickup in lending lifted its net income 18 percent. Wells Fargo has managed to avoid problems plaguing other big banks and is now the country's largest mortgage lender. The bank's stock gained 3 percent, or $1.06, to $33.91.

Todd Salamone, director of research at Schaeffer's Investment Research, said the rally in bank stocks shows that investors had expected the worst. When they're too gloomy on an industry, the slightest bit of good news can jolt their stocks up.

The rally swept across the stock market. Five stocks rose for every one that fell on the New York Stock Exchange, and all 10 industry groups within the S&P 500 rose, led by financial firms.

The surge erased the week's losses for the main indexes. The Dow would up flat for the week, and the S&P eked out a 0.2 percent gain. The technology-heavy Nasdaq, which is more sensitive to swings in the economy, slumped 1 percent.

The stock market took a beating this week as the U.S. corporate earnings season got off to a weak start and Europe stumbled along in its latest attempts to resolve the region's debt crisis.

In other trading, the Standard & Poor's 500 index rose 22.02 points to 1,356.78 and the Nasdaq composite gained 42.28 points to 2,908.47.

The Associated Press contributed to this report.

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