Briefcase

J.P. Morgan, Bank One to create bank behemoth

J.P. Morgan Chase & Co. and Bank One Corp. announced Wednesday that they were merging in a deal that would create the second-largest U.S. banking company after Citigroup.

The merged company, to be based in New York, will have assets of $1.1 trillion with 2,300 branches in 17 states, the two banks said in an announcement after the stock market closed.

Only Citigroup, with assets of about $1.19 trillion and operations in more than 100 countries, would be bigger if the deal is approved.

J.P. Morgan Chase’s William B. Harrison, 60, will be chairman and chief executive officer, while Bank One CEO James Dimon will be president and chief operating officer. The 47-year-old Dimon would succeed Harrison as CEO in 2006, with Harrison continuing to serve as chairman.

Study

Fed reports economy still gathering steam

The economy was continuing to rebound as the new year began with many regions of the country reporting that retailers enjoyed a boost from a rush of last-minute holiday shopping, the Federal Reserve said Wednesday.

Even the nation’s manufacturing sector showed further signs of life, and the central bank said reports from its 12 regional banks suggested the economic rebound that began in the second half of last year was gathering momentum in late December and early January. Housing and auto sales remained strong amid scattered signs that manufacturers were beginning to rehire some of the 2.8 million workers laid off during the last three years.

The Kansas City regional bank reported that retail sales in the region were “quite solid,” and that labor markets firmed slightly. The Kansas City bank also reported a continued expansion in manufacturing and a strong housing market.

Retail

KB Toys seeks protection

Blaming the fierce holiday price wars in toys, KB Toys Inc. filed for bankruptcy protection from creditors Wednesday.

The privately-held retailer with 1,300 stores was hit hard by discounters, primarily Wal-Mart Stores Inc., during the holiday season. Last month, it informed suppliers that it was slowing down payments amid sluggish sales.

The filing under Chapter 11 of the federal bankruptcy laws will enable it to develop a financial reorganizaton plan while continuing its operations.

KB Toys said it hoped to emerge from bankruptcy protection before the 2004 holiday season.

Wall Street

Earnings boost markets

Investors had a surge of optimism Wednesday ahead of the first major fourth-quarter earnings reports, sending stocks sharply higher and carrying the Dow Jones industrial average up more than 110 points.

Among the companies reporting earnings were Intel, which posted earnings 8 cents per share above analysts’ estimates, Apple Computer Inc., which beat estimates by 2 cents per share, and Yahoo! Inc., which posted earnings in line with estimates.

The Dow closed up 111.19, or 1.1 percent. Broader stock indicators also closed higher.