JPMorgan Chase Beats on Earnings, Dow Rises on Retail News

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is gaining this morning, buoyed by earnings reports from big banks JPMorgan Chase (NYSE: JPM  ) and Wells Fargo (NYSE: WFC  ) . Good news from the retail sector and a U.S. budget surplus for the month of December worked their magic as well.

Bloomberg reported that December's federal budget surplus of $53.2 billion was a great improvement over the $1.19 billion deficit of one year ago, as increased payroll taxes, big payments from Fannie Mae and Freddie Mac, and a brightening economy helped push the excess revenue numbers higher than the $44 billion analysts expected.

In the retail arena, sales beat predictions as well, increasing 0.2% in December from the previous month. The U.S. Census Bureau noted that both nonstore retailers and motor vehicle sales rose 2.1% from the year-ago period. The National Retail Federation chimed in, saying that holiday sales were up 3.8% for November and December, though the prior consensus was a bit higher at 3.9%.

The Bureau of Labor Statistics announced that December U.S. import prices showed no change from the previous month, after a decline of 0.9% in November.

Big banks kick off earnings season
Both JPMorgan Chase and Wells Fargo reported earnings this morning, with the former delivering an earnings beat of $0.16 per share in the fourth quarter, despite the big bank's various legal settlements. The $1.40 per-share adjusted earnings topped the year-ago figure of $1.35 per share.

Though net income for all of 2013 came in at $17.9 billion, compared with 2012's $21.3 billion, CEO Jamie Dimon commented that the bank has put "significant issues" behind it, including the Bernie Madoff settlement. On a conference call, Dimon noted that JPMorgan Chase will replace approximately 2 million credit and debit cards as a result of security breaches.

Wells Fargo beat earnings forecasts by $0.02 per share, noting a 10% increase in net income in the fourth quarter of 2013 versus the year-ago quarter. Though CFO Tim Sloan noted the decline in the mortgage business, he credited the bank's "diversified model" for its strong showing.

Not unexpectedly, the mortgage slowdown hit both banks hard. Wells reported a drop in noninterest income to $9.9 billion, from $11.3 billion in the year-ago period, due to the dip in mortgage banking; JPMorgan showed a decline in net revenue of $1 billion to $1.1 billion, directly attributed to the decrease in lower mortgage fees and other related income.

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