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Commerce Bancshares: Financial Winner

NEW YORK ( TheStreet) -- Commerce Bancshares (CBSH - Get Report) was the winner among the largest U.S. financial names on Thursday, with shares rising 2% to close at $39.28.

The broad indexes all declined, despite a U.S. Labor Department report that initial jobless claims for the week ended July 7 declined to 350,000 from an upwardly revised 376,000 the previous week. Unemployment claims for the week ended July 7 were at their lowest level since March 2008, but some economists were skeptical that the numbers showed real economic improvement, because of seasonal factors.

The KBW Bank Index (I:BKX) declined over 1% to close at 44.46, with all 24 index components showing declines for the session, except for Commerce Bancshares.

Investors' eyes early on Friday will turn to JPMorgan Chase (JPM - Get Report), which will report its second-quarter results at 7AM, with analysts polled by Thomson Reuters estimating a profit of 72 cents a share, declining from $1.31 during the first quarter, and $1.27 during the second quarter of 2011.

JPMorgan's shares declined 2% to close at $34.04. The shares are now down 16% since closing at $40.74 on May 10, right before CEO James Dimon disclosed a hedge trading loss by its Chief investment Office (CIO) estimated at "slightly more than $2 billion." Dimon said that as the company wound down the hedge trading positions, the losses might climb higher, and the New York Times reported on June 28 that cumulative losses from the trades could eventually total as much as $9 billion, while the Wall Street Journal reported on Wednesday that the trading losses could total $5 billion.

JPM Chart JPM data by YCharts

JPMorgan's shares are cheaply priced, trading just below their reported March 31 tangible book value of $34.91, and for six times the consensus 2013 earnings estimate of $5.29 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $4.21.

Based on a 30-cent quarterly payout, the shares have a dividend yield of 3.53%.

RBC Capital Markets analyst Gerard Cassidy rates JPMorgan Chase "Outperform," with a $50 price target, saying on Thursday that "if the gross trading losses are $5 billion or less and the company can prove it has "ring fenced" the problem, the stock will rally (assuming its core businesses report solid-to-good results)." On the other hand, the analyst said that "trading losses above $5 billion and a discovery that the CIO contributed a high percentage to historical earnings would likely lead to the stock 'selling-off', in our opinion."

Interested in more on JPMorgan Chase? See TheStreet Ratings' report card for this stock.
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