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Stocks mostly lower as earnings kick off

Stocks mostly lower as earnings kick off

Socks fell Tuesday as investors considered a first batch of corporate earnings results and eyed special events from tech giants Amazon (AMZN) and Apple (AAPL).

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JPMorgan Chase (JPM) kicked off the first set of earnings reports by posting an unexpected increase in profit over last year, driven by a near-30% jump in markets revenue after a stock rally earlier this year and jump in volume drove more equity and bond trading activity. Its provisions for credit costs totaled a smaller than expected $611 million, versus the more than $2 billion in reserve Wall Street had expected the bank would set aside in anticipation of soured loans during the pandemic.

On the whole, consensus economists expect companies within the S&P 500 financials sector will see earnings per share decline, in aggregate, by 19.4% over last year. Still, this estimate – along with the broader estimate for S&P 500 earnings to decline by 20.5% in the third-quarter – has been upgraded since the start of the summer, as analysts mulled a less dire outlook for economic activity since the spring.

“The increase in analysts’ earnings estimates reflects increased confidence in the outlook, even with the challenges Covid-19 still presents in terms of social distancing, various safety protocols, and shifting consumer behavior,” LPL Research analysts Jeffrey Buchbinder and Ryan Detrick said in a note Monday. “We have been encouraged by recent data pointing to a continued steady reopening of the economy, and we believe the likelihood that additional lockdowns may meaningfully impair business activity remains very low.”

“We believe the chances are good that the technology sector and the digital media and e-commerce internet industry groups will produce earnings growth in the third quarter,” they added. “As long as those winners keep winning, and we think they will, they provide a

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Financial Sector ETFs Kick Off a Big Earnings Week for Banks

Financial Sector ETFs Kick Off a Big Earnings Week for Banks

It’s going to be a big week for financial sector exchange traded funds as Wall Street banks kick off the third quarter earnings season.

JPMorgan Chase & Co (NYSE: JPM) will report earnings on Tuesday before the open bell along with Citigroup (NYSE: C). Other banks to reveal their third quarter results this week include Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC) and Goldman Sachs (NYSE: GS).

The Financial Select Sector SPDR (NYSEArca: XLF) includes a 10.9% position in JPM, 6.8% in BAC, 3.7% in WFC, 3.3% in C and 2.5% in GS.

“We’re keeping our eye on JPMorgan. I think that’s going to be the bellwether that we’re really going to want to watch here in earnings,” Piper Sandler chief market technician Craig Johnson told CNBC. “We’ve been making this kind of nice symmetrical sort of setup in the price action here recently, and that really suggests that perhaps a lot of the bad news might be priced in.”

The financial sector has been underperforming the broader market while the S&P 500 has been reaching toward new 52-week highs. However, bargain hunters are looking at banks as a value play, which typically outperforms during the beginning stages of a broad economic recovery.

“Then secondly, I like Wells Fargo right here. It’s the ultimate value play. In my opinion, it trades at too steep of a discount to book value. And if management can just stay out of the media and they can execute on their cost-cutting plan, I think the stock is a good buy at these levels,” Michael Binger, president of Gradient Investments, told CNBC.

However, some warn of potential risks. For instance, traders are concerned about potential political risk following the election. Banks have enjoyed a rollback of regulations, but November’s vote could mean a

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