(JPM) JPMorgan Delivers Unlikely Friday the 13th Report

Stocks will find it difficult to sustain their upward drift of recent days in the face of lackluster results from banking bellwether JP Morgan (JPM) and the absence of anything meaningful on the economic calendar. This morning’s bigger-than-expected November Trade Deficit number, though not a market-moving release, adds to the negative headlines.

An outsized gain in the University of Michigan Consumer Sentiment Index, on deck for release a little later, could potentially help lift sentiment. But the overall tone of today’s trading action will likely remain subdued given investors’ evaluation of the fourth quarter reporting season in light of the JP Morgan news.

The headlines from across the pond remain non-threatening for another day, though overnight deposits at the European Central Bank (ECB) have hit another new all-time high. Banks have been reluctant to lend the money out, preferring instead the safety of the ECB deposit. Importantly, Italy had another successful bond auction today, helping sustain the recent downtrend in its bond yields. The yield on the benchmark 10-year Italian government bond has dropped steadily in recent days from the 7% level, reaching 6.53% today. This easing of Europe-related concerns has been a major contributor to the steady stock market gains of recent days.

But the focus today will be on the weaker than expected results from JP Morgan, which sets the stage for results from its peers Citigroup (C), Wells Fargo (WFC) and Goldman Sachs (GS) next week. The banking giant met bottom-line expectations but came short on revenue, with the capital market turmoil weighing on its investment banking results. Credit quality continued improve, with loan-loss provisions down from the preceding and year-earlier quarters.

In other news, media reports indicate that rival airlines and a private-equity firm are separately weighing their options to mount a bid for AMR Corp, which filed for Chapter 11 protection two months ago. Delta Air Lines (DAL), US Airways Group (LCC) and TPG Capital are the reported suitors. If it comes to fruition, this would be one of the last deals in the multi-year consolidation wave in the industry that has helped thin the carrier ranks over the past decade or so.

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