JPMorgan fuels US bank and stock market rally

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(Bloomberg) – JPMorgan Chase & Co. is set to end Monday with its biggest gain in 18 months after CEO Jamie Dimon gave the nation’s largest bank and the U.S. stock market a boost with optimistic comments on the state of the economy.

JPMorgan shares rose as much as 7.9%, the most since November 2020, making it the second-best performing stock in the S&P 500 and one of the biggest contributors to the 1.6% rise in the benchmark index. Bank of America Corp., Wells Fargo & Co. and Citigroup Inc., all of which gained at least 5% each, also helped fuel the market rise.

The KBW banking index climbed 5.1% on Dimon’s upbeat comments, a higher forecast for net interest income excluding its markets business and a flat spending outlook.

Wells Fargo banking analyst Mike Mayo said in a note to clients that the biggest takeaway from JPMorgan’s rally is that it shows there is “no recession looming.” The presentation was optimistic for the company and “even more so for the industry”, he added.

Bank stocks have come under heavy pressure this year on fears that an aggressive round of interest rate hikes by the Federal Reserve could push the US economy into a recession. The KBW banking index has fallen about 25% since hitting a record high in early January.

JPMorgan was the hardest hit among the biggest banking stocks. While Monday’s surge helped erase some of this year’s decline, the lender is still down nearly 21%, making it the worst-performing major bank stock. Still, analysts haven’t given up on the company, with the 12-month average price target calling for a 23% gain, close to the highest since the pandemic began.

Monday’s upward push also helped bolster sentiment in U.S. stock markets. The S&P 500 Financials Index was the best performing sub-gauge of the day, with JPMorgan accounting for more than 4% of the overall market rise. Meanwhile, Citigroup, Bank of America and Wells Fargo were all among the top gainers.

(Updates to include broader market trades, prices throughout.)

©2022 Bloomberg LP

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