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Stocks slightly higher as bank earnings come in mixed

Stocks slightly higher as bank earnings come in mixed

Stocks ticked up Wednesday morning as a host of major banks released a mixed set of quarterly results.

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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

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Stocks Tick Up After Goldman Earnings Soar, But Key Economic Indicator Shows Consumer Worries

Stocks Tick Up After Goldman Earnings Soar, But Key Economic Indicator Shows Consumer Worries

Topline

Stocks barely budged Wednesday morning after a mixed bag of pre-market earnings results revealed that the economic recovery is still suffering from weak fundamentals.

Key Facts

As of 9:35 a.m., the Dow Jones Industrial Average had edged up .1%, while the S&P 500 and the tech-heavy Nasdaq ticked up .2% and .5%, respectively.

Shares of Goldman Sachs climbed 1% after the New York-based investment banking giant reported $3.5 billion in profits and a 30% surge in revenue fueled by the mid-pandemic trading boom. 

Bank of America, on the other hand, failed to impress investors, posting mixed results for the third quarter that beat analysts expectations on profits, which totaled $4.9 billion, but fell behind on revenue expectations; its shares are down nearly 3%.

Wells Fargo shares are down 3% after reporting a 56% drop in quarterly earnings due to decreased interest income in light of historically low interest rates, the firm said.

Global markets were also fairly tepid on Wednesday: As of market open, the United Kingdom’s FTSE 100 had fallen .4%, and France’s CAC 40 was virtually flat, while Japan’s Nikkei 225 ended Wednesday up just .1%.

The consumer price index for September–a key measure of inflation–came in slightly below expectations, rising .19% during the month and leading to an unchanged year-over-year rate of 1.7%.

Key Background

The Covid-19 pandemic threw the economy into a deep recession, and Federal Reserve Vice Chairman Richard Clarida said Wednesday morning that the U.S. economy needs another year–or maybe more–until it fully recovers. The recovery thus far has been marked by slowed job growth, layoffs that remain high and a volatile stock market that’s been rocked in recent weeks by mounting uncertainty around

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PNC Financial (PNC) Q3 Earnings Beat, Provisions Decline

PNC Financial (PNC) Q3 Earnings Beat, Provisions Decline

PNC Financial PNC pulled off third-quarter 2020 positive earnings surprise of 62% on prudent expense management. Earnings per share of $3.39 surpassed the Zacks Consensus Estimate of $2.09. Also, the figure was 15% higher than the prior-year level.

Shares of PNC Financial gained 1.5% in pre-market trading as investors reacted positively to the decline in expenses and lower provisions. A full day’s trading session will depict a better picture.

Moreover, decent fee income aided revenue growth. However, a lower net interest margin and decrease in loans were undermining factors.

Segment-wise, quarterly net income in Corporate & Institutional Banking and Retail banking climbed 4% and 53%, year over year, respectively. Further, the Other segment reported a 69% rise in net income, while the Asset Management Group segment registered a whopping 98% growth.

Fee Income Aids Revenues, Loans Decline, Expenses Fall

Total revenues for the reported quarter came in at $4.28 billion, up 1% year over year. The top line surpassed the Zacks Consensus Estimate of $3.97 billion.

Net interest income declined 1% from the year-ago quarter to $2.48 billion. The fall is attributable to lower yields on earning assets, partially offset by lower rates on deposits and borrowings and higher average earning assets. However, the net interest margin contracted 45 basis points to 2.39% due to lower yields on earning assets, partially muted by lower funding costs.

Non-interest income was up 3% year over year to $1.8 billion on higher asset management, corporate services, residential mortgage and other income. This was partially muted by lower income from consumer services and service charges on deposits.

PNC Financial’s non-interest expenses totaled $2.53 billion, down 4% from the year-ago figure. This decline primarily resulted from the fall in marketing and other costs, partly offset by higher personnel expenses.

Efficiency ratio was 59% compared with

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Stock futures struggle for direction as bank earnings come in mixed

Stock futures struggle for direction as bank earnings come in mixed

Stock futures traded flat to slightly lower Wednesday morning, as a host of major banks released their quarterly results.

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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.

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

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Fulton Financial (FULT) Expected to Beat Earnings Estimates: Can the Stock Move Higher?

Fulton Financial (FULT) Expected to Beat Earnings Estimates: Can the Stock Move Higher?

The market expects Fulton Financial (FULT) to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended September 2020. This widely-known consensus outlook is important in assessing the company’s earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on October 20. On the other hand, if they miss, the stock may move lower.

While the sustainability of the immediate price change and future earnings expectations will mostly depend on management’s discussion of business conditions on the earnings call, it’s worth handicapping the probability of a positive EPS surprise.

Zacks Consensus Estimate

This financial holding company is expected to post quarterly earnings of $0.19 per share in its upcoming report, which represents a year-over-year change of -48.7%.

Revenues are expected to be $217.30 million, down 3.1% from the year-ago quarter.

Estimate Revisions Trend

The consensus EPS estimate for the quarter has been revised 50% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change.

Price, Consensus and EPS Surprise

Earnings Whisper

Estimate revisions ahead of a company’s earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model — the Zacks Earnings ESP (Expected Surprise Prediction).

The Zacks Earnings ESP compares the Most Accurate Estimate to the

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