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Stocks Today: Tech Stocks Lead Losses, Bank Earnings Season Kicks Off
Reports from JPMorgan and BlackRock mark the unofficial start of earnings season, which is seen as a potential catalyst for a resurgent stock rally.
Stocks tumbled on Friday, with tech stocks losing their usual sizzle, as investors looked to the big bank earnings reports to kick off the earnings season.
The NASDAQ Resonance Resonance Index, which is dominated by technology stocks (^IXIC) slipped 0.9%, while the S&P 500 (GSPCThe Dow Jones Industrial Average (TP3T) fell 0.7%.^DJI) fell 0.6%, or more than 200 points.
Stocks fell after the "Magnificent Seven" tech stocks led the way on Thursday, once again buoyed by positive artificial intelligence. Investors also took comfort from lower-than-expected wholesale inflation, after being spooked by unexpected consumer price data.
BlackRock (BLK) released its earnings report early Friday, amid hopes that the company's latest business results will revive the stock market's early-year rally. Shares of BlackRock, the world's largest asset manager, soared in morning trading after its profit rose 36%.
Investors are watching how giant banks are proving to benefit if interest rates remain higher than expected this year. JPMorgan Chase (JPM) reports that it has seen its profits grow as it has earned more from interest expense; conversely, Wells Fargo (WFC) has seen its earnings shrink as interest income has fallen.
Meanwhile, precious metals continued to shine: gold (GC=F) rose to a new all-time high above US$2,400 and silver (SI=F) hit its highest price since early 2021. Investors seeking safety in the face of heightened tensions in the Middle East, but avoiding US government bonds amid inflation fears, were cited as a demand driver.
Live4update
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Jamie Dymond makes a good point about interest rates Yahoo Finance!
JPMorgan Chase's (JPM) Chief Executive Officer Jamie Dimon and Chief Financial Officer Jeremy Barnum just had an interesting call with reporters.
The topic is of course earnings, but it also includes Damon's views on interest rates and the economy.
Bubbles made a good point about interest rates (I've asked Barnum how companies can prepare for higher and longer interest rates):
"I'd just like to point out that it's not so much about the higher rates themselves, it's about why - whether it's due to stagflation, which is obviously a negative factor, or whether it's due to healthy growth, which is actually pretty good."
Dymond went on to say that he didn't "predict" the recession.
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Brian Sozzi.Banks' Financial Reports Reveal Trends Ahead of Time: Investment Banking
One department jumped out at us this morning in the financial reports of JPMorgan Chase (JPM) and Wells Fargo (WFC).
Investment banking.
JPMorgan Chase's investment banking sales increased 27% year-over-year, driven by higher debt and equity underwriting fees.
Wells Fargo's investment banking revenue increased 69% year-over-year.
Does this bode well for more buyouts and IPOs this year? Let the debate begin.
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Brian Sozzi.
BlackRock's financial results are unconvincing.
We should be highly critical of financial reports and financial conference calls. Question everything, good and bad.
That said, it's hard for me to discount the industry results announced this morning by BlackRock (BLK). In the simplest terms, it's a giant asset management company whose assets under management (AUM) grew by $1.4 trillion year over year to $10.5 trillion. At the same time, the company's tight control of expenses led to a 180 basis point improvement in operating margins from a year ago.
As far as Belgrade's masks go, it doesn't get much better than this.
Shares are up nearly 2% before rock, and deservedly so.
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Brian Sozzi.
Inside the Apple deal
At the end of the week, shares of Apple Inc (AAPL) were back on Yahoo Finance's "Hot Stocks" page.
On Thursday, the company's shares soared on reports that it was refreshing its Mac lineup with new artificial intelligence chips. That may seem like good news, but it may just put the tech giant's shares back on the long side after falling 9% so far this year.
In a new client report, JP Morgan analyst Samik Chatterjee pinpoints a number of reasons why the stock is lagging.
Chatterjee said iPhone sales figures "highlight headwinds," including in China. The downside risk to Apple's services business is also worrisome amid "heightened scrutiny in a number of regions."
But Chatterjee believes these concerns are now largely embedded in the stock price.
He said investors are starting to feel good about Apple:
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The stock's valuation premium to Big Pan has moderated - it is now trading at the low end of recent multiples since the iPhone 12 launch.
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Investor interest in Apple as a stock in the "AI promotion cycle" is "growing."
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