JPMorgan Chase & Co. (JPM) Earnings Could Determine the Dow’s Fate

Perhaps most importantly, the Fed’s recent consideration of an exit from its quantitative-easing program will have big implications for JPMorgan Chase & Co. (NYSE:JPM). The stock plunged after the Fed’s June meeting as markets interpreted the central bank’s comments as paving the way for reductions in the Fed’s $85 billion-per-month purchases of Treasury bonds and mortgage-backed securities. That drop caused even greater carnage in the bond market, as mortgage rates soared and now threaten to choke off not only refinancing activity but also new-home purchasing. Yet Fed Chairman Ben Bernanke’s comments last night that he expects the central bank to remain “highly accommodative” could well signal that investors have been mistaken in believing that an end to bond-buying is imminent.

In JPMorgan Chase & Co. (NYSE:JPM)’s earnings report, watch closely for indications of where the bank believes it can pick up the slack from what will likely be dramatic declines in mortgage activity. Without some new source of revenue, JPMorgan’s long recovery over the past four years might start to slow, and that could spell trouble for it and the rest of the banking sector.

The article JPMorgan Earnings Could Determine the Dow’s Fate originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger owns warrants on JPMorgan Chase. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends American Express. The Motley Fool owns shares of Citigroup and JPMorgan Chase.

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