As investors wait for second-quarter earnings season to start next week, the stock market has moved largely in tune with the latest news on the overall economy. Today's latest figures encouraged continued optimism, with factory orders having risen at a slightly faster-than-expected pace of 2.1% in May. Still, with many companies having already given negative guidance on earnings for the just-ended quarter, investors are anxiously waiting for company-specific results to help them come up with a broader perspective on the health of the market, and that anxiety might lead to hesitation before investors decide whether the first-half rally will continue or reverse course for a while. At 10:45 a.m. EDT, the Dow Jones Industrials (DJINDICES: ^DJI ) picked up 65 points to climb above the 15,000 mark once more. Broader markets posted similar percentage gains.
The big winner of the morning was JPMorgan Chase (NYSE: JPM ) , which climbed more than 2% after getting a favorable analyst recommendation from Raymond James. With the bank having put its London Whale scandal behind it, favorable earnings-growth potential led the analyst to boost its earnings estimates and to increase its share-price target. Yet the more important long-term news for JPMorgan and fellow Dow component Bank of America (NYSE: BAC ) is whether the Federal Reserve will vote to adopt the set of international banking capital rules known as Basel III. With the Fed reportedly looking at certain even stricter provisions as add-ons to the Basel III rules, JPMorgan and B of A could face required changes to their business models. Yet comments from late last year came largely from community bankers, suggesting that the big banks might actually be better prepared for Basel III than their smaller peers, despite the additional rules like leverage ratios that would apply only to the largest banks in the nation.
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Finally, auto sales are among the first economic data that come out every month, and today, both Ford (NYSE: F ) and General Motors (NYSE: GM ) were up around 2% after posting their figures for June. GM posted a 6.5% jump in June U.S. vehicle sales, with the company saying it was the best performance in nearly five years. Meanwhile, Ford said light-vehicle sales in the U.S. jumped 13%, giving the automaker its best June in seven years. Ford noted that it thinks the industry's overall performance will have its best sales rate since late 2007, and given the influence that auto manufacturing has on the overall economy, that could prove good news not just for Ford and GM, but for all of the companies that rely on the industry for their success.