It’s a pretty good day on the stock market for mortgage lenders — and for companies that have invested in them. JP Morgan (JPM) and Merrill Lynch (MER) are both up this morning on news from different quarters.

JP Morgan

JP Morgan is benefiting from the announcement that it plans to prepare ahead of time for possible losses. Despite turning a profit (albeit a much smaller one than usual), the company is setting aside billions in order to prepare for the future. Additionally, JPM is preparing to buy more weak stocks, perhaps spurred forward by the success of acquiring Bear Stearns. BloggingStocks reports on the reasoning behind JP Morgan’s merging mood:

JP Morgan’s likely desire to buy smaller financial firms may be a sign that stocks in banks and brokerages are bottoming. Dimon wants a piece of that.

Has the financial sector really bottomed out? Is it time for a turnaround?

Perhaps.

Merrill Lynch

Merrill Lynch is also seeing success this morning. But that probably has a lot to do with the fact that after posting yet another quarterly loss (mostly due to subprime writedowns) MER is announcing that it will cut 4,000 jobs.

Merrill Lynch is in damage control mode, but the moves made by the current CEO (as opposed to the old CEO, who led Merrill Lynch into risky — and ultimately stupid — investments) seem to bolstering some measure of confidence.

So, all in all, things seem to be turning around for some mortgage lenders and other financial sector companies. But how long will it last if they aren’t letting people borrow money to buy houses?

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss.

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JPM, MER, financial sector

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