Goldman Sachs (GS) led to more money center banks reporting early Thursday as a booming economy collides with rising prices. The GS stock jumped. Bank shares were mixed overall.
Goldman shares rose 2.1 percent. Morgan Stanley (MS) rose 1.8% after reporting its first quarter results. Wells Fargo (WFC) fell 3.5% as revenue came below the analyst target.
JPMorgan Chase (JPM) shares traded unchanged, after reporting mixed results for the first quarter on Wednesday, warning of “significant geopolitical and economic challenges” ahead as Russia’s war against Ukraine continues. JPMorgan shares traded effectively flat in pre-market action.
Goldman Sachs earnings
Discretion: Wall Street expects Goldman Sachs’ earnings to fall 51% to $ 9.03 per share. Revenue was expected to fall 32% to $ 12.013 billion.
Results: Earnings fell less than expected 42% to $ 10.76 per share. shares. Revenue fell 27% to $ 12.93 billion, also a smaller-than-expected decline. Asset management revenue fell 88% during the quarter to $ 546 million. Consumer and wealth management revenues increased 21% to DKK 2.1 billion.
Prior to the release, CEO David Solomon said during a conference in February before Russia’s invasion that he expected investment banking and M&A activity to continue to be healthy this year. But he said there would be fewer IPOs this year than last. IPO activity has dried up against the backdrop of weak stock markets in 2022.
Goldman Sachs stock rose 0.4 percent. Competitive Morgan Stanley (MS) rose 0.2 pct. Morgan Stanley also reports this on Thursday.
JPMorgan’s earnings fell to $ 2.63 per share, down 42% from a year ago. It was below estimates at $ 2.72 per share, according to FactSet.
Revenue came in at $ 31.59 billion, down 5%. The topline figure surpassed estimates of $ 30.601 billion.
The company also reported a $ 902 million credit reserve “driven by increasing the likelihood of downside risks due to high inflation and the war in Ukraine” and other exposure to Russia. JPMorgan also reported $ 524 million in losses in its corporate and investment banking division due to commodity exposure and write-downs related to “Russia-associated counterparties.”
“We remain optimistic about the economy, at least in the short term – consumer and business balances as well as consumer spending remain at healthy levels – but see significant geopolitical and economic challenges ahead due to high inflation, supply chain problems and the war in Ukraine,” Dimon said. in a statement.
During JPMorgan’s earnings interview with analysts, Dimon said he did not believe there would be a recession in the US this year. But he said predictions were difficult and often fruitless.
“First, I can not predict the future more than anyone else,” he said during the call. “And the Fed’s predicts it, and everyone predicts it, and everyone’s wrong all the time.”
He also said that “usually wars do not necessarily affect the global economy in the short term. But there are exceptions to that. This may very well be one of them.”
In Dimon’s annual letter to shareholders earlier this month, he said the bank’s economists expected the war and sanctions to shrink Russia’s economy by 12.5% by the middle of the year. These economists also expected that the war would reduce economic growth in the US to 2.5% this year compared to previous forecasts of a 3% increase.
JPMorgan’s total market revenue fell 3% during the quarter. The turnover of the fixed income markets fell by 1 per cent. The stock markets’ turnover fell by 7 per cent. Investment banking revenue fell 28% due to lower insurance fees for equity and debt issues.
JPMorgan Shares, Bank Shares
JPMorgan shares fell 3.2% to 127.30 on Wednesday. The shares have reached the lowest level since January 2021.
The stock has a Composite Rating of 39. Their EPS Rating is 65. The relative strength line of the stock has fallen.
Among other bank shares, Bank of america (BAC) fell 0.9 per cent. That stock was consolidating. Wells Fargo (WFC) increased 0.25% and also consolidated. Citigroup (C) withdrew 0.8%.
It informs Bank of America next week. Results from Wells Fargo and Citigroup will be presented on Thursday.
In March, the Federal Reserve raised its key interest rate for the first time since 2018. It typically allows banks to charge more on their own loans and increase profits. The central bank has signaled that it may become more aggressive with its rate hike.
Still, bank stocks have fallen in recent weeks due to concerns about a flattened yield curve, a measure of the difference between short-term interest rates and government debt. A flatter curve can be a sign of increased investor anxiety about the economy, and rates can affect mortgage rates and the cost of borrowing elsewhere.
‘Treacherous’ terrain for bank stocks
As more banks prepare to report, analysts, like elsewhere, will try to measure whether higher prices have affected the demand from banks’ customers. Meanwhile, the flat yield curve is not good news for traditional bank profitability, where banks are lending short and long-term loans.
Troy Rohrbaugh, JPMorgan’s head of global markets, said at a conference last month that the turmoil surrounding Russia – from sanctions to its role as a supplier of oil and wheat – had worried customers in its trading company. The prices of these goods rose after the invasion.
“The markets are extremely treacherous at the moment,” he said. “There’s a lot of uncertainty. There are a lot of clients who are under extreme stress.”
He said the bank’s first quarter-to-date market revenue from earlier the same month had fallen 10%. But he said the bank would not provide further forecasts.
This sentiment follows stronger trading results and greater optimism a year ago. Dimon said in JPMorgan’s first-quarter earnings announcement last year that state aid and “euphoria around the potential end of the pandemic” had the potential to promote economic growth for years.
Still, in the fourth quarter of last year, whose results were reported in January, a jump in merger agreements and a strong IPO market boosted JPMorgan’s investment banking business. But analysts expressed concern about the bank’s ability to increase profits as it invests in technology and tries to open new branches and attract employees.
Barron’s, citing data from Dealogic, said the volume of deal deals had weakened in the first quarter. The publication said the transaction pipeline was still solid, but that a stiffer regulatory environment had slowed the process of getting them done.
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