Investment bank JPMorgan Chase (NYSE: JPM) announced that second-quarter earnings checked in at 28 cents per share -- or $2.72 billion. A year ago, the financial giant reported earnings of $2 billion, or 53 cents per share. This year's quarterly earnings included a charge of 27 cents per share after JPM repaid the $25 billion invested by the government in the Troubled Asset Relief Program (TARP). There was also a 10-cent-per-share penalty thanks to a special assessment from the FDIC. Expectations called for earnings of four cents per share.JPM also reported record first-half revenue, stemming from "solid" performances in its commercial banking, asset management, treasury and security services, and its retail banking. That said, JPM expects credit costs to remain elevated in the "foreseeable future." No doubt that these results will lend some bullish momentum to Wall Street today, as JPM's earnings reinforce the quarterly results from Goldman Sachs (NYSE: GS).
Watch for naysayers to emerge though (I may be one of them), as this group will note that the bank's expectations may have been set a tad low -- making an earnings beat rather easy. In fact, those naysayers may bring up the fact that there is still a lot of debt out there and unemployment is still high. Technically, the bulls will point out that the stock is riding higher along the support of its 20-week moving average. There are others that will point out that the shares face overhead resistance from their 20-month moving average. This trendline has acted as resistance since 2008, and it doesn't seem ready to give up this role.
Yes, there are some reasons to be bullish about JPM and the bank's results. That said, understand that there is still plenty of downside potential for the equity. Remember that the future won't be as bright as some experts say, nor will it be as dismal -- odds are that there will be a bit of moderation.
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