After a big advance in the stock market, it's only natural for investors to take a step back to assess their gains and plot strategy for the future. That seems to be the prevailing theme today as investors navigate earnings reports and economic data to try to figure out their next move. Rising producer prices and a slight drop in overall consumer confidence provided evidence that there are still economic challenges to face despite soaring stock markets, and a guidance cut from United Parcel Service (UPS 2.77%) served as a barometer for the state of the important shipping industry. Yet strong earnings from banks pointed to stronger fundamentals for the market. By 10:55 a.m. EDT, the best the Dow Jones Industrials (^DJI 1.73%) could do was a gain of 20 points, with the S&P posting similarly modest gains.
Among banks, JPMorgan (JPM 2.98%) is up 0.4% after announcing a better-than-expected increase in net income. The company's investment-banking division did particularly well, growing profits 19%, and an 8% increase in total deposits helped drive revenue up 14%. Interestingly, mortgage applications saw a continued dramatic increase, rising 37% despite the fact that interest rates have been on the rise for the past two months. Still, loan growth could come under threat in the near future when higher rates finally start having an impact, and with the stock already having made big advances, JPMorgan shareholders can't rely on major gains coming from the news.
Verizon (VZ 0.85%) has fallen the most of any Dow stock this morning, down 1.9%. The stock appears to be responding to a research note from Moffett Research citing a commitment that its Verizon Wireless subsidiary has with Apple (AAPL 1.45%) to sell an estimated $23.5 billion in iPhones this year. Moffett believes Verizon could fall short by as much as $14 billion, and it's unclear whether or how Apple would enforce any rights it might have against Verizon if it fails to meet the sales threshold.
Finally, UPS has fallen more than 5% after it issued a profit warning. The shipping company said it expects to report earnings this quarter of $1.13, about 6% below what analysts had expected, and it cut its full-year forecast by about 3% to 4%. UPS cited slowing package-volume growth and noted that its international customers have increasingly moved from high-margin air transport to lower-cost ship transport. With many investors looking at the health of the shipping industry as a sign of overall economic activity, UPS' news is troubling not only for the company, but for the world's growth prospects overall.
