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JPMorgan Profits Slide as the Dow Bounces Higher

By Dan Carroll – Jan 14, 2014 at 2:30PM

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Intel leads the Dow's charge into the green despite a sluggish day from JPMorgan's stock following the bank's earnings release

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.

Stocks are bouncing back today from their slow start to 2014, with industries across the markets surging into the green. The Dow Jones Industrial Average (^DJI 0.45%) hasn't disappointed investors, rising by more than 90 points as of 2:30 p.m. EST, with most of its blue-chip member stocks notching gains. Earnings season is back, as JPMorgan Chase (JPM 0.19%) stepped up today with quarterly results. No stock's moving quite so high as Intel (INTC -1.11%), the tech leader that has shot to the top of the Dow today. Let's catch up on what you need to know.

Mixed news from retail, JPMorgan
U.S. retailers kicked things off on the markets today with mixed news for the broader economy. American retail sales gained by 0.2% in December, , or 0.7% when excluding poor auto sales that lagged for the month. The gain managed to beat economist predictions of a slight sales drop, but it wasn't enough to overcome what was a so-so year for retailers in 2013. Sales unadjusted for inflation gained 4.2% through 2013, and even though the final few months of the year showed an uptick in activity, retailers need to post a strong start to 2014 to inspire confidence.

On the stock side of things today, JPMorgan's stock is hanging flat during afternoon trading after the bank announced that its net profits declined by 7.3% in the fourth quarter, with revenue falling 1%. Earnings per share excluding one-time items came in at $1.40, topping analyst projections by $0.05. While revenue also topped expectations, investors apparently haven't been wowed by the results today.

Legal costs hit home on the bank's results in the past quarter, with a $0.27 per-share charge hampering earnings. JPMorgan CEO Jamie Dimon said he was pleased about the bank's ability "to have put some significant issues behind us this quarter," referring to the company's numerous legal settlements over the past year.

Still, JPMorgan's dealing with more challenges ahead even as it focuses back on business, particularly as loan demand wanes. The company's mortgage business saw revenue decline, but earnings gain -- and it's clear that JP Morgan's cost-cutting moves recently have helped a great deal in keeping the company churning ahead through recent hurdles. Nonetheless, an upturn in the mortgage business would go a long way toward helping the company pick up momentum in future quarters.

JPMorgan, meanwhile, upgraded Intel from neutral to overweight, which pushed the tech stock higher by 3.8% by midafternoon. JPMorgan's betting on the PC market's fall to subside soon. That fall has slammed Intel and other PC-reliant companies across the tech sector lately.

Intel's PC Client Group has been largely responsible for the company's declining revenue in past quarters. Over the first nine months in 2013, the business unit's sales fell more than 5%, outweighing Intel's big gains in its next-largest business, its Data Center Group. Still, with the company so reliant on PC sales for the bulk of its revenue, Intel investors have to hope that JPMorgan's on to something with its upgrade.

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

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$34,347.03 (0.45%) $152.97
Intel Stock Quote
$29.34 (-1.11%) $0.33
JPMorgan Chase Stock Quote
JPMorgan Chase
$136.74 (0.19%) $0.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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