US Stocks Market Overview – Stocks Rally Following Earnings Beat by JP Morgan Chase

US stocks surged on Friday, following better than expected financial results from JP Morgan Chase. The large cap financial institution beat on the top and bottom line, sending the financials higher. All three major indices were higher, led by the Dow Industrials which rallied 0.94%. Most sectors were higher led by Energy and Financials, while Healthcare bucked the trend. Before the opening bell, Chevron announced that it had purchased Anadarko Petroleum for 33-billion in stock and cash. This sent the entire energy sector higher. The Best performing share in the S&P 500 was Anadarko which rallied 32%, and is still under the $65 per share Chevron expects to pay for the company. Import prices came in stronger than expected confirming the slight uptick in inflation seen on Wednesday (consumer prices) and Thursday (producer prices). The S&P 500 index closed above the psychologically important 2,900 for the first time since October 2018. US yields are also climbing closing above 2.55%.

Chevron Announces Deal to Buoy Anadarko

Chevron on Friday announced that it would purchase oil and gas exploration and production company Anadarko Petroleum for stock and cash valued at $33 billion. This is completely a jump into shale by Chevron who has the operational leverage to generate double digit gains. Anadarko is at the right place at the right time but does not have the leverage to generate the gains of the new company. This will significantly boost in shale oil production as well as natural gas for Chevron. Shares of Anadarko rose approximately 30% following the news. The deal values Anadarko at $65 per share, a 37% premium to its Thursday close. Prices will likely hover near that area as the Merger Arbitrage traders take control.

JP Morgan Chase Beats Estimates

The first of the major banks released better than expected earnings. JP Morgan Chase reported record Q1 earnings and revenue that exceeded expectations. JP Morgan said profit rose 5% to $9.18 billion, or $2.65 a share, compared with expectations of $2.35 a share. Revenue also rose 5% to $29.9 billion, exceeding estimates by about $1.5 billion as net interest income grew 8%.

 

Import Inflation Continues to Rise

US import prices rose for a third consecutive month in March, driven by energy prices. The BLS reported that import prices rose 0.6% in March. Expectations were for import prices to rise by 0.4% in March. February was revised higher to show import prices rising to 1.0. Petroleum prices rose 4.7% in March. Industrial supplies and materials were up 2.7%. Year over year import prices was unchanged after declining on an annual basis in the three prior months. Export prices rose 0.7% in March, after rising by the same margin in February. Expectations were for a 0.2% gain. Export prices rose 0.6% year over year in March after rising 0.3% in February