Wall Street rally continues on deal hopes

Trading has been volatile today, but US stocks have pushed higher, extending their gains from yesterday’s big advance.

Heading into the weekend, the wheels that began to turn yesterday in Washington look like they are picking up momentum, which means short-sellers may be feeling a little nervous and squaring their positions as a contingency against a debt-ceiling deal being firmed up when the markets are shut.

The leading US stock indices posted their second-best finishes of the entire year yesterday, with the Dow closing up more than 300 points, and the upward momentum has continued into today’s trading.

By early afternoon in New York, the Dow had advanced 0.57% or 86 points to 15,212, the S&P 500 had risen 0.5% to once again break above the key 1700 level and the NASDAQ 100 gained 0.67%.

Banking giant JP Morgan reported a quarterly loss thanks to its legal issues, with more than $9 billion being swallowed by litigation-related costs. Excluding its legal fees, the company delivered earnings of $1.42 per share on revenue of $23.9 billion, compared to $1.40 a share on $25.9 billion in the same quarter last year.

This is the first time that JP Morgan has posted a quarterly loss under CEO Jamie Dimon. JP Morgan is normally seen as a bellwether for the rest of the banking sector; the exceptional nature of the litigation may not be reflected elsewhere in the sector, but issues such as rising interest rates causing soft demand for refinancing mortgages could well be a common theme amongst its peers when they report next week.

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