Stocks rocket after JPMorgan Chase raises dividend

By Matthew Craft, The Associated Press
Updated 16m ago

NEW YORK – Stocks bounded higher Tuesday after JPMorgan Chase (JPM) said it is increasing its quarterly stock dividend to 30 cents per share from 25 cents.

The bank said around 3 p.m. ET that the increase was authorized by the Federal Reserve, which recently conducted a stress test on the 19 largest financial institutions. Results of the tests will be released Thursday.

JPMorgan, the largest bank in the nation by assets, said Tuesday that the Fed also authorized it to buy back $15 billion of its own stock by the end of the first quarter 2013.

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Stocks were already showing nice gains after strong February retail sales results early Tuesday. The Nasdaq composite pushed back above 3,000 for the first time in two weeks.

The Commerce Department said retail sales rose 1.1% last month, biggest gain since September. Some of the gain reflected higher gas prices, but consumers also bought more cars, clothes and appliances. Department stores had their biggest gains in more than a year.

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Dow Jones industrial average, five trading days The government also revised its estimates higher for December and January.

A reading of confidence among small business owners also rose in February for the sixth month in a row. The National Federation of Independent Business optimism index reached its highest level in a year, helped by an increase in expected sales.

The S&P 500, a broad measure of the stock market, has already gained 10% this year, more than its average for a full calendar year. After such a strong start, can stocks go higher?

"Yes," said Brian Gendreau, market strategist at Cetera Financial. "Valuations are still very cheap."

Investors are paying 13 times the past year's earnings for the S&P 500 index. The long-term average is closer to 15. "Of course," Gendreau said, "stocks can stay cheap for a long time."

The Federal Reserve will wrap up its monthly meeting Tuesday afternoon. Economists expect the Fed to repeat its pledge to keep short-term interest rates at a record low until late 2014, at least.

Optimism over the U.S. economy after the release of solid retail sales figures shored up global markets.

Sentiment in Europe was also boosted after Greece was cleared to get its next round of bailout cash, avoiding imminent bankruptcy.

Markets have done well this year on signs that Europe's debt crisis is abating and the U.S. economy is recovering faster than expected.

Dan Greenhaus, chief global strategist at BTIG LLC, said: "There is much to like in today's (retail sales) report if only because the revisions to January's data implies Q1 GDP could be a bit stronger than originally estimated" in reference to first-quarter economic growth.

In Europe, the FTSE 100 index of leading British shares was up 0.6% at 5,928 while Germany's DAX rose 0.9% to 6,962. The CAC-40 in France was 1% higher too at 3,524.

Earlier in Asia, South Korea's Kospi rose 1.1% to 2,025.04 but Hong Kong's Hang Seng added 1% to 21,339.70.

The Nikkei 225 index in Japan closed less than 0.1% higher at 9,899.08 with trading little-affected by the Bank of Japan's decision to keep its benchmark interest rate unchanged at zero to 0.1%. Japan's central bank also said it is allowing companies in areas struck by a disastrous earthquake and tsunami in March 2011 an extra year to pay back debts and adding more money to lending to encourage growth.

Oil prices gave up some earlier gains, with benchmark oil for April delivery down 32 cents to $106.02 per barrel in electronic trading on the New York Mercantile Exchange.

Among companies making big moves:

• Great Wolf Resorts (WOLF) jumped 25% to $5.13. Apollo Global Management said it has agreed to buy the indoor water park operator for $5 a share.

•Urban Outfitters(URBN) plunged 4.9%, the worst drop in the S&P 500 index. The retailer reported earnings that fell below what analysts were expecting after it had to mark down prices on women's clothing at its Anthropologie and Urban Outfitters stores.

• Carmike Cinemas (CKEC) soared 20%. The Georgia-based movie theater chain reported earnings and sales that far outpaced what Wall Street analysts had expected.

Stocks rocket after JPMorgan Chase raises dividend