Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
The game of chicken between investors and a potential federal debt default continued this morning, with optimists winning the battle in the early going. The Dow Jones Industrials (DJINDICES:^DJI) quickly jumped to triple-digit gains and traded higher by 183 points as of 10:50 a.m. EDT. Three financial stocks topped the list of the average's gainers. Veteran Dow component JPMorgan Chase (NYSE:JPM) led all stocks with a nearly 3% gain. But new entrants Goldman Sachs (NYSE:GS) and Visa (NYSE:V) also posted sharp gains, respectively rising 2.5% and 1.8% and suggesting a common thread within the industry.
For JPMorgan, one news-related catalyst partly explained the gains. The bank will pay $100 million to the Commodity Futures Trading Commission to settle allegations about derivatives trades connected with the London Whale incident. That pushes the total regulatory hit to JPMorgan from the debacle above the $1 billion mark, with the bank previously agreeing to pay a total of $920 million to other regulatory bodies. Once again, though, investors seem content to pay large settlements to resolve the bank's legal issues.
Goldman's advance doesn't make nearly as much sense. As Fool contributor Alex Dumortier observed this morning, early results from its peers have shown a big drop in revenue from core areas of traditional Goldman strength, especially the fixed-income trading segment. Bank of America became the latest member of the Wall Street contingent to report weak results at its trading desk, yet investors appear to think Goldman can somehow escape those headwinds and once again surprise on the upside.
Visa's gains also make little sense in light of economists' concerns about the impact of the government shutdown. Visa relies on transaction volume that is governed largely by consumer spending, and economists have started to tie the ongoing series of political battles to a permanent reduction in job growth that could hurt the consumer-led economy. Visa won't be the only company to bear the brunt of a loss of consumer confidence, but it would definitely see a substantial impact that could cause it to pull back from its recent highs.
Fool contributor Dan Caplinger owns warrants on JPMorgan Chase and Bank of America. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Bank of America, Goldman Sachs, and Visa. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.