Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Why Stocks Have Rebounded This Afternoon: Hewlett-Packard Company (HPQ), JPMorgan Chase & Co. (JPM)

Blue-chip stocks have mounted an impressive comeback this afternoon. After starting the day solidly in the red, the Dow Jones Industrial Average has clawed its way back near breakeven. With roughly an hour left in the trading session, the index is down 12 points, or 0.08%.

The day got off to a rough start after Cyprus announced that it may confiscate a portion of bank deposits in an effort to raise funds for the country’s bailout. The plan as originally conceived called for the small island nation to tax every depositor with less than 100,000 euros in the bank at 6.75% and those more than that amount at 9.9%. There have since been a number of proposed amendments that could change those figures. In the meantime, however, Cyprus has instituted an official bank holiday, closing its financial institutions until Thursday. To read more about this, click here.

Also fueling the bearish sentiment was a downbeat report about housing here in the United States. The National Association of Home Builders released its homebuilder confidence index today, showing a decline from 46 in February to 44 this month — a reading of less than 50 suggests negative sentiment. This is the second consecutive monthly decline and purportedly owes to concerns that demand for new homes is exceeding the supply. While this could constrain sales over the short term, the broader improvements in housing over the last year are nevertheless positive for the long-term outlook.

Hewlett-Packard Company (HPQ)

The best-performing stock on the Dow today is Hewlett-Packard Company (NYSE:HPQ). Earlier today, an analyst at investment bank Morgan Stanley upgraded the tech company’s stock from “equal weight” to “overweight,” signifying that its future performance is expected to best the broader market. As my colleague Anders Bylund noted earlier, the reasoning behind the upgrade boils down to cash flow. Last November, the company projected $5 billion in free cash flow for the current fiscal year. The Morgan Stanley analyst, however, thinks the figure will come closer to $6.7 billion.

Either way, there’s no disputing the fact that Hewlett-Packard Company (NYSE:HPQ) has struggled of late. Over the past two years, its stock has fallen by 46%, plummeting from about $42 per share in March of 2011 down to about $23 per share today. That being said, it has mounted an impressive rally over the last four months, nearly doubling since the end of November. And for the year to date, it’s far and away the best-performing stock on the Dow, up by 56%.

Conversely, shares of JPMorgan Chase & Co. (NYSE:JPM) are lower on the heels of last week’s dividend announcement and Friday’s congressional hearing about the now-infamous “London Whale” debacle which cost the bank more than $6 billion in losses last year.

After the market closed on Thursday, the Federal Reserve released the results of its 2013 Comprehensive Capital Analysis and Review, which determined which of the nation’s 18 largest banks would be allowed to raise dividends and/or share buybacks this year. While the central bank didn’t formally object to JPMorgan Chase & Co. (NYSE:JPM)’s capital plans, which included a $6 billion repurchase program and an increase in its quarterly dividend from $0.30 to $0.38, it’s nevertheless requiring the bank, along with Goldman Sachs Group, Inc. (NYSE:GS), to submit “new capital plans by the end of the third quarter to address weaknesses in their capital planning processes.”

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.