JPMorgan and Friends Lend to the Dow's Gain


After a disappointing close yesterday, the Dow Jones Industrial Average is headed higher early in trading, with a 67-point gain as of 11:40 a.m. EDT. Some positive news on the economic front and a rally from the financial district may be the fuel the index needs to keep its momentum.

Sentiment is high
New data on consumer sentiment for May shows that it's reached its highest level in almost six years. Upper-income households carried the data, as families continued to feel better about economic conditions and financial outlooks. The index from Reuters and the University of Michigan noted the rise to 83.7 from 76.4 in April, which topped analyst expectations of 78. Consumer spending attitudes were notably improved as the index showed a big rise in shopping plans for durable goods from 137 to 148.

Since consumer spending is so important for the economic recovery, improved spending attitudes are encouraging. As more segments of the consumer demographics return to positive sentiment, the country may see an increase in lending, and a boost to the housing market and other areas that will drive further economic recovery.

A big win
JPMorgan is leading the financials within the Dow higher this morning, with a 2% gain at 11:40 a.m. EDT. The bank and its compatriots can add another tally to their regulatory-win column. Yesterday the Commodity Futures Trading Commission voted to approve new rules that create an exchange platform for trading credit-default, interest rate, and commodity swaps. The new rules will allow for greater pricing transparency, but some are disappointed that the commission approved a "watered down" version of the Dodd-Frank rules. For JPMorgan and Bank of America, which is up 0.7% so far this morning, it's a welcome change.

These two Dow component stocks, along with Citigroup , Morgan Stanley , and Goldman Sachs, control 95% of the U.S. market for swaps trading. And with a global market totaling $633 trillion, the banks are happy to maintain their hold on that share. The previous rules had aimed to reduce costs for customers, which would have cut into the banks' revenue. The newly approved terms represent a compromise on behalf of the banks, which lobbied long and hard to keep Dodd-Frank off the trading floor.

Is JPMorgan still on top?
Headlines are full of concerns about the big bank and its current legal and internal issues. With big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or if finance stocks are a screaming buy. To help figure out whether JPMorgan is a buy today, check out The Motley Fool's premium research report on the company. Click here now for instant access!

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