After five consecutive negative trading days the markets have finally rallied thanks to strong earnings reports from Wells Fargo and JP Morgan.
JPMorgan Chase (NSYE: JPM) and Wells Fargo (NYSE: WFC) both reported earnings this morning before the opening bell. The definitive winner of the two is Wells Fargo.
Wells reported another record quarter of earnings while JP Morgan felt the consequences of its "London Whale Trade."
JP Morgan announced the bet would cost the company a total of $5.8 billion, the high end of analyst's predictions. Of that loss $4.4 billion is accounted for in this quarter and the remaining $1.4 billion was put on last quarter's balance sheet.
What is positive about JP Morgan's earnings is the fact that the company was able to post profits despite the trading loss.
JPMorgan posted second-quarter net income of $4.96 billion, or $1.21 a share, compared with $5.43 billion, or $1.27 a share a year earlier.
The derivative loss after taxes reduced earnings per share by 69 cents, the company said.
Wells Fargo boosted its earnings 17% compared to the same quarter a year ago. Wells reported earnings of $0.82 per share beating expectations by a penny.
Wells Fargo stock (NSYE: WFC) is up over 3% and JP Morgan stock (NYSE: JPM) is up almost 5% as of noon.
The markets are ignoring the main economic indicator released today. The University of Michigan's Consumer sentiment index came in at 72.0 its lowest level of the year, down from 73.2 in June.
The lousy trend of hiring coupled with global uncertainties and a volatile stock market have weakened household spending which accounts for 70% of the economy. The Michigan survey's index of consumer expectations for six months from now also fell to a yearly low to 64.8 from 67.8.
Besides Wells and JP Morgan here are two other companies making news today.