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Today marks the beginning of the reporting season for companies unveiling their earnings in the second quarter of this year, and JPMorgan Chase was the first to announce its profits. The figures exceeded analysts' expectations, as the bank benefited from higher interest rates and growth in interest income.
Here's what the company reported:
Profit: $4.37 per share, compared to the Refinitiv estimate of $4.
Revenue: $42.4 billion, surpassing the forecast of $38.96 billion.
Despite the regional banking crisis that began in March of this year, the company actually benefited from it, as deposits started flowing into JPMorgan from smaller credit institutions. This helped the bank's stocks rise by 11% this year, in contrast to a 16% decline in the KBW Bank index. When JPMorgan last reported its results in April, its stocks showed the largest profit increase in two decades.
JPMorgan also has the advantage of owning the bankrupt bank First Republic, whose acquisition began in May of this year with the intervention of the US government. According to experts, this acquisition, which added approximately $203 billion in loans and securities and $92 billion in deposits, will undoubtedly help JPMorgan overcome the obstacles faced by the industry.
It is also worth noting that creditors have started setting aside more reserves to cover losses due to expectations of a slowdown in economic growth this year.
It is expected that JPMorgan will create a reserve of $2.72 billion to cover credit losses. The focus will now be on the speech of JPMorgan's CEO, Jamie Dimon, who will discuss the state of the economy and his expectations regarding banking regulation.
Pre-market
Alphabet, the parent company of Google, gained 4.4% after launching its large language model, Bard AI, in Brazil and the European Union.
Shares of semiconductor and artificial intelligence manufacturer NVIDIA rose 2.2%. The company recently announced a $50 million investment in Recursion to aid in the development of AI-based drugs.
Shares of media giant Disney increased by less than 1% after the company announced an extension of CEO Bob Iger's contract for two years until 2026. Following the news, Bank of America reaffirmed its recommendation to buy Disney.
Carvana stocks dropped by 7% after JPMorgan downgraded their rating from "hold" to "sell," stating that the used car dealer's valuation has significantly deviated from fundamental indicators.
As for the technical outlook for the S&P 500, demand for the index remains high. Buyers have a chance to continue the upward trend, but bulls need to push above $4,515 with all their might. From this level, there could be a surge towards $4,539. An equally important task for the bulls will be to maintain control above $4,589, which will strengthen the bullish market. In case of a downward movement due to a decrease in risk appetite, buyers need to hold around $4,488. A break below this level will quickly push the trading instrument back to $4,469 and open the path towards $4,447.
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