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Wall Street staged a late-afternoon rally Thursday, following JPMorgan Chase & Co.’s better-than-anticipated report on first-quarter profits, which made it the third major U.S. bank recently to beat investor predictions and sustain expectations that the financial industry and the rest of the economy are recovering.
The Dow Jones Industrial Average closed at 8,125.43, up 95.81 points. The broader Standard & Poor’s 500-stocks Index closed at 865.30, up 13.24 points, and the tech-heavy NASDAQ closed at 1,670.44, up 43.64 points.
JPMorgan Chase, the second-largest U.S. bank by assets, reported earnings of $2.14 billion — better than expected but still 10 percent less than its $2.37 billion in earnings a year earlier. Company stock fell 40 cents a share in the first quarter, according to the report, but per-share profit was expected to be 32 cents, according to analysts surveyed by Bloomberg.
JPMorgan Chase stock was up 2.09 percent, to $33.24 a share, at the close of trading. Still, analysts were concerned that the company’s default rate on credit cards this quarter reached 7.72 percent, compared with 5.56 percent in the previous quarter.
The markets also opened Thursday to a Census Bureau report on housing and mixed Labor Department news on first-time unemployment claims.
The Labor Department reported that first-time unemployment claims dropped 53,000 for the week ending April 11. The number of seasonally adjusted initial claims was 610,000. However, a record 6 million people continued to file claims during the week ending April 4, the agency’s most up-to-date figure. The number of claims increased by 172,000 from the revised total of 5.85 million during the previous week.
The U.S. economy officially entered a recession in December 2007.
The Census Bureau reported the number of home-building permits in March dropped by 9 percent, compared with February numbers. The March figure was 45 percent below the March 2008 estimate of 932,000.
Private housing starts were 10 percent below the revised February estimate of 572,000 and 48.4 percent below the March 2008 rate of 988,000, according to the agency. Single-family housing starts in March were 358,000, unchanged from February.
Brian Lipps, a Charles Schwab & Co. vice president, said the low housing starts is good news.
“The last thing we want to be doing is adding to the [housing] inventory in a weak market,” he said.
Mr. Lipps also said investors appear to have a growing appetite for risk, citing an initial public offering Thursday of stock in the Rosetta Stone educational software company. The company offered 6.25 million shares of common stock for $18 a share on the New York Stock Exchange. Rosetta Stone is offering 3.125 million shares, and stockholders are offering the remaining 3.125 million.
The stock was at $25.45 a share at the close of trading.
U.S. markets opened this week on a five-week rally. They closed Wednesday on a similar late-day rally that helped the Dow gain 109.44 points, to close at 8,029.62.
On Monday night, the Wall Street-based investment bank Goldman Sachs Group Inc. reported $1.81 billion in profits and said it will issue $5 billion in stock to help repay the $10 billion Treasury Department loan it received last year. The report also exceeded analysts’ expectations.
Seven days ago, Wells Fargo was the first of major U.S. banks to report first-quarter earnings. The company forecast a record $3 billion profit for the first quarter, assuring investors anxious about upcoming bank earning reports and helping the Dow gain 247 points.
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