Table of Contents
- 1 9:40 a.m. ET: Wells Fargo shares fall after quarterly profit misses estimates
- 2 9:31 a.m. ET: Stocks open slightly higher amid earnings onslaught
- 3 8:41 a.m. ET: Producer prices rise faster than expected in September as food prices jump
- 4 7:35 a.m. ET: Goldman Sachs shares jump as investment banking, fixed-income trading fuel estimates-topping results
- 5 7:25 a.m. ET: Stock futures struggle for direction
- 6 7:17 a.m. ET Wednesday: Bank of America shares fall after trading revenue disappoints
- 7 6:05 p.m. ET Tuesday: Stock futures hug the flat line in late trading
Stocks ticked up Wednesday morning as a host of major banks released a mixed set of quarterly results.
Dow component Goldman Sachs (GS) on Wednesday reported third-quarter results that well exceeded consensus estimates, as investment banking and fixed income trading revenue each grew over last year and topped expectations. The trading boost Goldman Sachs and other banks including JPMorgan Chase and Citigroup but it did not extend to Bank of America (BAC), which posted lighter-than-expected trading revenue from stocks and bonds, and a miss on overall revenue compared to estimates. Bank of America also built its credit reserves during the quarter, adding more padding in case of potential customer loan defaults amid the pandemic.
At Wells Fargo (WFC), the company swung back to a quarterly profit in the third quarter after a loss in the second, though income missed expectations and was pressured by low rates, and activity overall remained low as both loans and deposits declined.
Meanwhile, lackluster prospects for more stimulus and concerns over the timeline for developing a COVID-19 vaccine and treatment weighed on investors. Each of the S&P 500, Dow and Nasdaq declined for the first time in five sessions as of Tuesday’s close.
An impasse among U.S. lawmakers in Washington has kept hopes running low that more virus relief aid will come to fruition before the November election. Senate Majority Leader Mitch McConnell said Tuesday he will have the Senate take up relief legislation after the chamber’s return on Monday, with his narrower proposal set to include funds chiefly targeted to the Paycheck Protection Program. House Speaker Nancy Pelosi, however, has rejected slimmed-down stimulus proposals and deemed them inadequate, and even President Donald Trump said on Tuesday on Twitter to “Go big or go home!!!” for more stimulus.
Meanwhile, a pair of front-runners in the race to develop a COVID-19 vaccine and treatment announced that their respective trials were put on pause over safety concerns. Eli Lilly (LLY) said Tuesday afternoon that enrollment for its COVID-19 treatment would be temporarily halted, less then a day after Johnson & Johnson (JNJ) said clinical trials for its COVID-19 vaccine candidate were paused due to an unexplained illness in a participant. Shares of Eli Lilly and Johnson & Johnson were little changed overnight after dropping during Tuesday’s session..
Wells Fargo swung back to a profit in the third quarter after posting a loss in the second, though its income missed expectations as low rates weighed heavily on the bank.
Net interest income totaled $9.4 billion, falling short of estimates for just over $9.6 billion, according to Bloomberg consensus data. The bottom-line miss occurred even as provision expenses came in less than expected at $769 million, or less than half the $1.65 billion estimate. Both loans and deposit fell at Wells Fargo during the quarter.
CEO Charlie Scharf struck a cautious tone on the pace of the economic recovery in this morning’s earning’s statement.
“As we look forward, the trajectory of the economic recovery remains unclear as the negative impact of COVID continues and further fiscal stimulus is uncertain, but we remain strong with our capital and liquidity levels well above regulatory minimums,” Scharf said.
9:31 a.m. ET: Stocks open slightly higher amid earnings onslaught
Here were the main moves in markets, as of 9:31 a.m. ET:
S&P 500 (^GSPC): +3.56 points (+0.1%) to 3,515.49
Dow (^DJI): +50.75 points (+0.18%) to 28,730.56
Nasdaq (^IXIC): +17.73 points (+0.15%) to 11,878.84
Crude (CL=F): +$0.64 (+1.59%) to $40.84 a barrel
Gold (GC=F): +$18.30 (+0.97%) to $1,912.90 per ounce
10-year Treasury (^TNX): -0.8 bps to yield 0.719%
8:41 a.m. ET: Producer prices rise faster than expected in September as food prices jump
Prices to U.S. producers unexpectedly accelerated in September amid a jump in food costs, the Bureau of Labor Statistics (BLS) reported Wednesday.
The bureau’s producer prices index (PPI) increased 0.4% in September after a 0.3% increase in August, and topped estimates for a 0.2% rise, according to Bloomberg consensus data. Food prices rose 1.2% in September for the category’s first increase in four months.
Excluding volatile food and energy prices, the PPI still rose 0.4% month over month and 1.2% over last year, with each metric coming in faster than expected as trade, transportation and warehousing service prices also rose.
Shares of Goldman Sachs (GS) rose in early trading after the bank posted third-quarter sales and profit that were stronger than expected.
Earnings of $9.68 per share were much better than the $5.53 expected, and net revenue of $10.78 billion was also ahead of the $9.40 billion consensus. These results came as fixed-income net revenues surged 49% over last year to $2.5 billion, and investment banking revenue increased 7% to $1.97 billion, with both measures topping expectations. Equity trading sales, however, were slightly lighter than the $2.14 billion expected, with Goldman Sachs reporting $2.05 billion in this division.
7:25 a.m. ET: Stock futures struggle for direction
Here were the main moves in markets, as of 7:25 a.m. ET:
S&P 500 futures (ES=F): 3,501.75, down 3 points or 0.09%
Dow futures (YM=F): 28,592.00, up 7 points or 0.02%
Nasdaq futures (NQ=F): 12,104.00, up 10 points or 0.08%
Crude (CL=F): -$0.19 (-0.47%) to $40.01 a barrel
Gold (GC=F): +$9.50 (+0.5%) to $1,904.10 per ounce
10-year Treasury (^TNX): -1 bps to yield 0.717%
Bank of America on Wednesday reported quarterly revenue that missed consensus estimates, with revenue net of interest expense falling 11% to $20.3 billion versus the $20.84 billion analysts had expected, according to Bloomberg data. Trading revenue from fixed income and equities totaled $3.3 billion, also short of the $3.5 billion expected.
Bank of America also built up its reserves to protect against customer loan defaults, with its allowance for credit losses increasing 2% from the prior quarter to $21.5 billion, with a net reserve build of $417 million.
6:05 p.m. ET Tuesday: Stock futures hug the flat line in late trading
Here were the main moves in equity markets, as of 6:05 p.m. ET:
S&P 500 futures (ES=F): 3,504.00, down 0.75 points or 0.02%
Dow futures (YM=F): 28,587.00, up 2 points or 0.01%
Nasdaq futures (NQ=F): 12,090.75, up down 3.25 points or 0.03%
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