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Morning Market Roundup: JPMorgan Trade Loss Grows, Wholesale Prices up, Mortgage Apps Boost Wells Fargo

Business

Here’s what’s important the business world this morning:

JPMorgan: JPMorgan Chase said Friday that a bad trade had cost the bank $5.8 billion this year, almost triple its original estimate, and raised the prospect that traders had improperly tried to conceal the blunder.

"This has shaken our company to the core," CEO Jamie Dimon said.

The bank said managers tied to the bad trade had been dismissed without severance pay and that it planned to revoke two years' worth of pay from each of those executives.

JPMorgan said it had lost $4.4 billion because of the trade from April through June, and its chief financial officer said the bank had lost an additional $1.4 billion in the first three months of the year.

Dimon's original estimate of the loss from the bad trade, disclosed in a surprise conference call with Wall Street analysts on May 10, was $2 billion.

Wells Fargo: Wells Fargo's net income and revenue rose in the second quarter, driven by a pickup in lending and a decline in the amount of bad loans.

The San Francisco-based bank reported an 18 percent increase in net income Friday, to $4.4 billion, compared with $3.7 billion in the same period a year ago.

On a per-share basis, the bank earned 82 cents, in line with estimates of analysts polled by FactSet. Revenue of $21.3 billion was also in line with analysts' expectations.

The past two months have been vicious for the broader banking industry, which has been hit by accusations of interest-rate fixing, downgrades by the Moody's ratings agency, and a surprise trading loss at JPMorgan Chase.

Wells Fargo has largely managed to avoid those problems. Its own earnings announcement was overshadowed by JPMorgan, which started a two-hour conference call at 7:30 a.m. to explain its $4.4 billion trading loss to analysts and investors.

U.S. Wholesale Prices: U.S. wholesale prices rose only slightly last month, as higher costs for food and pickup trucks offset another drop in energy prices. But overall inflation stayed mild.

The Labor Department says the producer price index increased 0.1 percent in June, after a steep drop of 1 percent in May. In the past 12 months, wholesale prices have risen 0.7 percent, the same as in May.

Excluding the volatile food and energy categories, core prices rose 0.2 percent. A 1.4 percent rise in the cost of pickup trucks - the biggest in more than a year - drove core prices higher.

In the past twelve months, core prices are up 2.6 percent, slightly below May's 2.7 percent increase.

U.S. Futures: Stock futures headed higher as two major U.S. banks posted quarterly earnings Friday and JPMorgan revealed that losses from an embarrassing trading misstep had grown to $4.4 billion, more than double its original estimate of $2 billion.

The nation's largest bank also said that it would be forced to restate first-quarter earnings, lowering net income by $459 million, after discovering new information that "raises questions about the integrity" of values placed on some of its trades.

Dow Jones industrial average futures added 40 points to 12,542. Standard & Poor's 500 futures rose 4 points to 1,333.20 and Nasdaq futures gained 10.25 points to 2,548.

The Associated Press contributed to this report.

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