Midday Commentary: Preferreds rise as JPMorgan, Wells Fargo report earnings; new issues climbing

By Stephanie N. Rotondo

Phoenix, July 13 - Preferred stocks were rising by midday on Friday, though one trader was puzzled as to why.

"I don't know why everything's jumping up," he said. With JPMorgan & Chase Co. stating that it could have "hidden losses" from the first quarter, "I expected banks to sell off and they're not.

"People are just chasing yield," he added.

There was only a little movement in JPMorgan's preferreds, and about the same in the preferreds of Wells Fargo & Co., which along with JPMorgan also had earnings out Friday. Wells Fargo's report was deemed "decent."

JPMorgan said that it had lost $5.8 billion this year from bad trades.

Despite the loss, the bank managed to report a nearly $5 billion profit for the second quarter.

Wells Fargo meantime reported a second-quarter profit of $4.6 billion, a 17% gain.

Wells' 7.875% enhanced trust preferreds (NYSE: BWF) were up 20 cents at $26.14. JPMorgan's 8.625% series J noncumulative preferreds (NYSE: JPMPI) inched up 24 cents to $27.46.

But recent new deals from Vornado Realty Trust and Chesapeake Lodging Trust remained busy.

Vornado's $300 million of 5.7% series K cumulative redeemable perpetual preferreds - a deal that priced Wednesday and freed up Thursday - was seen trading in a $25.15 to $25.20 context, according to a trader.

He said he also saw a $25.22 offer for paper.

Chesapeake's new $125 million offering of 7.75% series A cumulative redeemable preferred shares was also stronger at $25.10 bid, $25.20 offered.

That deal priced Tuesday and freed Wednesday.

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