Banking's Boom Keeps the Dow On Track for 100-Point Gain

JPMorgan and other bank stocks surge behind great results from Bank of America, while Microsoft leads tech stocks higher on a good day for blue-chip investors

Jan 15, 2014 at 2:30PM

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.

A surging Dow Jones Industrial Average (DJINDICES:^DJI) today is pulling in the kind of highs investors have gotten used to over the past year's run-up. As of 2 p.m. EST, the blue-chip index is up by more than 120 points.

Just a few member stocks are in the red today, as a big earnings report from former Dow member Bank of America (NYSE:BAC) has kicked financial stocks higher, with JPMorgan Chase (NYSE:JPM) leading the sector on the Dow. Microsoft (NASDAQ:MSFT), meanwhile, is the index's top stock overall. Let's catch up on what you need to know.

Wall Street wins relief
JPMorgan released its earnings report earlier in this week, but the stock's getting a big lift today after one of its top rivals sparked a wave of optimism around the banking industry. JPMorgan's stock is up 2.5% following Bank of America's announcement that its revenue jumped 15% for the fourth quarter, with net earnings per share roaring higher to $0.29 -- beating analyst expectations by a full $0.03. That's much better than the minuscule figure the company posted a year ago, when one-time costs weighed down its performance.

In a good sign for the sector at large, Bank of America's mortgage losses in the quarter fell to just $1.1 billion -- down from $3.7 billion a year ago. It's a big indication that BofA's climbing over the lingering aftermath of the recession.

Considering that JPMorgan also managed to top analyst expectations on both the top and bottom lines despite some hefty charges this past quarter, today's news is a burst of momentum for the bank's stock and a push for the big banks going forward. Even though mortgage demand remains depressed -- JPMorgan's bushiness is sluggish and BofA reported home loans down 49% compared to the past quarter -- getting past litigation and other charges that have weighed on banks is a critical piece of moving forward.

Microsoft has gained 2.5% on the day to lead the Dow Jones' 30 member stocks. Rumors are swirling that Microsoft is focusing on preparing a new operating system that could be announced in April, with a Windows 9 possibly out in 2015. It's speculation so far, but it'd be a welcome respite for Microsoft investors who have been shaking their head over the performance of Windows 8. Windows 8 shook up the company's traditional operating system look, jarring some customers and leading to criticism that forced the tech behemoth to release a sizable 8.1 patch.

A successful new OS from Microsoft could easily push investors and industry observers to forget all about the previous iteration's flop. While Microsoft has a ways to go in becoming a dominant player in the mobile market -- a niche that Windows 8 was supposed to assist in capturing -- the company is still dominant in software, and Windows 8's performance hasn't changed that. Microsoft's Windows division posted a revenue gain of more than 37% in its most recent quarter, and with its server and tools group and business division -- its largest two businesses by sales -- pulling down excellent growth, this company can overcome muted reactions to Windows 8 and keep moving higher.

How big Bbanks can earn you big profits
Around the Dow, JPMorgan Chase and bank stocks are big winners today, but should you trust the financial sector in the wake of the recession-even with its strong gains as of late? Many investors are terrified about investing in big banking stocks after the crash, but the sector has one notable stand-out. In a sea of mismanaged and dangerous peers, it rises above as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.

Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Microsoft. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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