Investors Thursday shrugged off J.P. Morgan & Co.'s announcement that it would take a $55 million first quarter charge to pay for employment severance packages.
Shares of the money center rose 50 cents to $59.625.
The market had expected a charge of between $25 million and $50 million, so the news was already partially reflected in the bank's share price, said Lawrence Cohn of PaineWebber Inc. The charge reduces earnings per share nearly 20 cents.
Details of the job losses and resulting severance packages were not released. But published reports estimate that Morgan, which had been on a hiring binge in the last few years, will shed 5% to 10% of its work force.
Downturns in trading and derivatives have put pressure on many Wall Street firms to cut back on staff.
Citing the weak trading environment, and the first quarter charge, Keefe, Bruyette & Woods Inc. analyst David Berry lowered his 1995 earnings estimate for Morgan by 65 cents per share, to $5.
Morgan also announced it would create three regional client groups in an attempt to meet customer needs better.
An Americas group will be led by Thomas Ketchum, a Europe, Middle East, and Africa group will be led by Walter Gubert and an Asia-Pacific group will be manned by Peter Woicke.
In other trading Thursday, Keycorp shares fell 50 cents to $28 after PaineWebber analyst Thomas D. McCandless issued a critical report on the Cleveland-based bank's recently announced five-year plan. He downgraded the stock to "neutral" from "attractive."
Keycorp told analysts earlier this week of the plan to focus on four key business areas: community banking, private banking, national consumer finance, and corporate banking.
While praising the bank for focusing its efforts, Mr. McCandless said prospects for increased revenue growth remain unclear.
He said management implied at a Tuesday meeting in New York that true growth in earnings per share has been only 6% to 8% annually, in contrast to a low double-digit growth rate that has been touted in the past.
Management credibility had already been "frayed somewhat" by the failure of the Keycorp-Society Corp. merger to deliver the predicted revenue growth, Mr. McCandless said. "This new disclosure only increases investor uncertainty," he said.
In other news, Putnam Trust Co. of Greenwich, Conn. fell $3 to $37.375, after surging $4.50 the previous day.
Earlier this month the company, which has $686 million in assets and $2 billion of trusts, said it had been contacted by several banks about a merger.
On Thursday, the bank said it had narrowed the prospective acquirers to one.
Also Thursday, CoreStates Financial Corp. rose $1 to $30.125, and U.S. Trust Corp. jumped $1.50 to $67.25.
