We just reported on how JPMorgan announced a $15 billion stock buyback program, and how this sent the stock market raging higher.
The Dow is up about 165 points now.
So why is the capital usage of one company having such a big market impact?
Well, remember, the latest results from the stress test are hanging over the market’s head. They’re due to be released Thursday after the bell.
The big dividend/buyback move is being seen as a “tell” on what will be in the stress tests.
The Federal Reserve has informed the Firm that it completed its 2012 Comprehensive Capital Analysis and Review (“CCAR”) and that it did not object to the Firm’s proposed capital distributions submitted pursuant to CCAR.
Now granted, JPMorgan always seems as one of the strongest banks, and so this doesn’t tell you anything about some of the other banks being tested (Hello, Bank of America!) but still this is a big buyback, and it’s clear that the Fed is loosening its grip over banks use of capital. That’s bullish.
Meanwhile, Bank of America is now up 4%, and Citi is up 6%.