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).
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