|Instrument:JP MORGAN CHASE|
Headquartered in New York, JPMorgan Chase & Co. (JPM) was founded on December 1st, 2000 following the merger of J.P. Morgan & Co and Chase Manhattan Corporation, in an all-stock deal. The company brought together companies with a storied heritage in American banking history. At the time of the merger, JPM became the second most valuable company in America, with assets totalling around $650 billion. As of September 2020, JPM stands as the largest bank in the US by assets, and the largest in the world by market capitalisation. The 2000 deal was the culmination of a history full of mergers, especially on the ‘Chase’ side. Just four years earlier, in 1996, the Chase Manhattan company was acquired by Chemical Banking, with the latter opting to continue the more prestigious ‘Chase’ brand. Chase Manhattan was itself a product of a 1955 merger between Chase National Bank and the Bank of Manhattan, two companies with roots going as far back as the 18th century.
The ‘Morgan’ side of the bank traces its roots to J.P. Morgan and Company, Inc. that was founded in 1895. In 1959, the company merged with the Guaranty Trust Company of New York, that was founded in 1864. By the end of the 20th century, J.P. Morgan & Co. had become one of the most respected blue-chip investment banking institutions in the world, whereas Chase Manhattan had a massive footprint in retail and consumer banking. The deal had obvious synergies and has, by all accounts, turned out well. JPMorgan Chase & Co. now operates as a worldwide financial services company that serves its customers through four major business segments: Consumer & Community Banking; Corporate & Investment Banking; Commercial Banking; and Asset & Wealth Management. The company is listed on the NYSE, where it trades under the ticker symbol JPM. It is included in the Financial Services sector, under the Banks-Diversified industry.
JPM Stock History
JPM has had four stock splits in its history, but none (yet) since the December 1st, 2000 mega-merger. Adjusted for splits, the JPM stock traded below $20 for a long time since the 1980s but received tailwinds in the late 1990s as banks took full advantage of offering financial services to the exploding tech industry. The stock broke above the $20 barrier in late 1995 and sustained a rally that took out the psychological $50 price by July 1998. After a brief retracement, the stock gathered pace and managed to print a high of circa $65 in March 2000. The turn of the millennium saw the stock selloff to lows of below $20 by September 2002. The stock then posted a gradual recovery that printed a high of just above $50 by May 2007, before the effects of the 2008 global financial crisis triggered a plunge to lows of below $20 by March 2009.
The subsequent recovery of economic conditions saw the stock comprehensively break above $50 in March 2013 and sustain a multiyear rally which printed JPM’s all-time high of circa $141 in January 2020. The coronavirus inspired economic shutdown then pressured the stock to below $80, but a rebound pushed JPM towards $100 as of September 2020. JPMorgan Chase & Co. has been a consistent dividend payer. The company pays quarterly dividends and has averaged a dividend yield of about 4%. Dividend-paying stocks, such as JPM, appeal to investors who like periodic incomes from their portfolio. Still, dividend-paying stocks are usually known to deliver lesser price gains over the long term compared to non-dividend paying stocks.
How to Trade JPM Stock
JPM is one of the largest financial institutions in the world. Here is what to consider when trading its stock:
- Legislative and Taxation Policy
The banking industry has seen more regulatory oversight in recent years, particularly after the 2008 financial crisis. The crisis was triggered by massive deregulation in the financial industry, and governments will be keen to ensure that this never happens again. This means that industry targeted legislation and taxation policies will have a massive impact on the company’s operations.
- Monetary Policy and Economic Conditions
Bank stocks, such as JPM, are very sensitive to underlying economic conditions and the prevailing monetary policy. Strong economies trigger higher prices, whereas weakening economies trigger lower prices. In terms of monetary policy, higher interest rates are profitable for banks and will inspire higher stock prices, whereas rate cuts will usually provide headwinds for the stock.
- Lawsuits and Negative PR
JPM has had to deal with multiple controversies throughout its history. In recent years, the bank has been accused of sanction violations, the Madoff scandal, manipulation of the energy market, mortgage overcharging, conflict of interest on investment research, as well as a breach of the Truth in Lending Act. Lawsuits and negative PR usually pressure the stock lower.
- New Product Rollout
Banks release new products from time to time. For JPM, investors will particularly be interested to see whether a new product will generate profits or expose the company to unnecessary risks.
- Periodic Earnings Reports
JPM’s fiscal year runs from January to December, and the company releases quarterly and annual reports that give investors and shareholders an insight into the health of its business as well as future prospects. Generally, upbeat numbers inspire higher prices, whereas downbeat figures trigger lower prices.
Why Trade JPM Stock with AvaTrade
Here is why you should trade JPM stock with AvaTrade:
- Global Brand
AvaTrade is an internationally regulated broker, with licenses in 7 various jurisdictions around the world. Our brand also enjoys massive global recognition, which gives traders the peace of mind that they are dealing with a trustworthy broker. Enjoy transparent trading with maximum safety and security.
- Leverage Trading
AvaTrade offers leverage of up to when you are trading JPM stock. Capitalise on trades even on marginal price movements.
- Go Long or Go Short
Trade JPM stock as a CFD and take advantage of both rising and falling markets.
- Trading Conditions
Trade JPM stock with transparent pricing, competitive spreads and fast execution on all order types at all times. *This stock is available for trading with 0.001 lots.
- AvaProtect ™
The AvaProtect ™ feature allows you to trade various assets with a hedge against market risks.
JP Morgan Stock FAQ
- Why should I trade JPMorgan Chase shares?
As one of the largest institutional banks with a huge presence in the equity and bond markets JPMorgan Chase should be on every trader’s radar. As is the case with most financial services companies, JPMorgan shares are sensitive to interest rate changes, and that can play in the trader’s favour. The stock also tends to react strongly to earnings releases, and these release dates can provide excellent trading opportunities that shouldn’t be missed. With a history stretching back to the 18th century, and a global network, JPMorgan Chase is not to be overlooked.
- Is JPMorgan Chase the best financial services stock for trading?
While JPMorgan might not be the best financial services stock for trading, it still has suitable price action for all types of traders. Scalpers should be able to profit from the hourly movements of the stock, day traders can take advantage of daily volatility, and even swing traders will be able to catch longer movements in the stock that last for days or even weeks. Overall, the stock is pretty choppy and volatile, but it is also extremely liquid, with more than 10 million shares changing hands on most days.
- What’s the best strategy for trading JPMorgan Chase shares?
We recommend using CFDs when trading JPMorgan Chase shares. The stock is equally likely to move down as it is up, and using CFDs avoids onerous short sale rules. Plus, our traders are able to take advantage of leverage when using CFDs, which can help to magnify winning trades. Of course, it also magnifies losing trades, so caution should be used with leverage. Finally, the use of CFDs in trading avoids the commissions that are so common when buying and selling actual shares. And CFDs can be used in any style of trading successfully.
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