The bullish mood on Wall Street continued on Friday, as the beginning of second-quarter earnings season is now officially under way. Half an hour into the trading day, the Dow Jones Industrial Average (^DJI 0.40%) was up triple digits, climbing about half a percent to add to gains from earlier in the week.
The two biggest percentage movers in the Dow Jones were JPMorgan Chase (JPM 0.06%) and UnitedHealth Group (UNH 0.30%), and both moved because of positive reactions to their respective quarterly financial reports. The two companies face very different conditions in their industries, but both have strong prospects to do well no matter what the near-term future brings. Here are the details you need to know from the earnings reports that JPMorgan and UnitedHealth gave their investors.
JPMorgan cashes in on the financial mini-crisis
Shares of JPMorgan Chase were up more than 2% Friday morning. The Wall Street banking giant reported second-quarter financial results that reflected the benefits of its having taken over First Republic Bank during the period, as the winner of an auction from federal regulators.
JPMorgan's quarterly numbers were impressive. Net revenue jumped 34% year over year to $41.3 billion. Net income got an even bigger boost, posting a 67% gain from year-ago levels to $14.47 billion. That worked out to earnings of $4.75 per share, up 72%.
A substantial amount of that growth came from the First Republic takeover, but certainly not all of it. Excluding First Republic, JPMorgan's net income would have risen 40% on a 21% rise in net revenue. Net interest income moved sharply higher, and even on the noninterest income side of the bank's income statement, JPMorgan got a 6% organic boost as part of an overall 25% rise. In total, JPMorgan attributed $2.4 billion in net income to First Republic, claiming a "bargain purchase" gain of $2.7 billion related to the favorable terms under which it took over the struggling bank's operations.
The corporate and investment banking side of JPMorgan's business didn't do as well as the consumer or commercial banking segments, but asset and wealth management helped take some of the load to produce growth as well. Equity markets were particularly weak for the banking giant, although fixed income also eased lower.
Investors have been spooked by the failures of several midsize banks, but if anything, JPMorgan Chase is stronger than it was before the mini-crisis. That bodes well for long-term shareholders.
UnitedHealth looks fit as a fiddle
Contributing even more to the Dow's gains was UnitedHealth Group, whose shares jumped almost 7% Friday morning. The health insurer and managed healthcare services provider reported second-quarter results that eased some of the concerns shareholders had about its growth trajectory.
UnitedHealth's numbers were impressive. Revenue of $92.9 billion for the period was up 16% year over year. Operating income climbed by $1 billion to $8.1 billion, and net income clocked in at $5.47 billion. Adjusted earnings of $6.14 per share were up by about 10% from year-ago levels.
Contributions from UnitedHealth's business units were roughly balanced. The UnitedHealthcare health insurance segment saw sales climb 13% from year-ago levels, while the Optum services segment reported a steeper 25% rise in revenue. In terms of operating earnings, though, both segments posted matching 13% gains.
Best of all, UnitedHealth now sees full-year profits coming in toward the higher end of its previous guidance range. With its lucrative combination of traditional health insurance and direct care provision, UnitedHealth is covering all of its bases and paving the way toward sustained growth that could last for years to come.
