Sector Snap: Investment Banks up on JPMorgan beat

JPMorgan Chase & Co. said earlier Thursday its earnings tumbled 53 percent, but it still beat analysts expectations.

JPMorgan earned $2 billion, or 54 cents per share, during the second quarter. Analysts had predicted JPMorgan would earn 44 cents per share during the quarter, according to Thomson Financial.

The large national bank purchased investment bank Bear Stearns in March amid continued deterioration in the credit markets. JPMorgan said the purchase of Bear Stearns cost it more than $500 million during the second quarter.

JPMorgan's results, coupled with Wells Fargo & Co.'s better-than-expected second-quarter results announced Wednesday, have at least temporarily alleviated fears among investors that the credit markets continue to deteriorate in a never-ending spiral.

The results at JPMorgan and Wells Fargo could mean Merrill Lynch's financial results--scheduled to be released after the market closes Thursday--will be better than anticipated. Analysts have been severely slashing their outlooks for Merrill Lynch, expecting it to take billions of dollars more in write-downs on its mortgage and investment holdings.

Investment banks have been especially hit hard over the past year by the declining value of bonds and debt backed by mortgages.

Analysts expect Merrill Lynch will lose $1.91 per share for the quarter. A month ago, analyst projected the investment bank would earn 31 cents per share.

Despite the projected losses, shares of Merrill Lynch rose $1.94, or 6.9 percent, to $29.94 in midday trading.

Shares of Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Morgan Stanley also rose Thursday.