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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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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