JPMorgan Dodges Hit on Risky M&A Loans After Fed-Driven Rally

For a sense of how much the Federal Reserve’s unprecedented stimulus helped heal credit markets and spare Wall Street from potential losses on risky corporate loans, look no further than JPMorgan Chase & Co.

The largest U.S. bank by assets reversed the majority of the nearly $900 million writedown it was forced to take in the first quarter on loans provided to companies and private equity firms to fund pending acquisitions. In second-quarter results released Tuesday, the lender marked up its loan portfolio by about $700 million.

The turnaround, which helped drive a 91% increase in investment banking revenue, comes ...