From Wall Street to Main Street
Highlights from the past week
Market / Macro Economic Summary Markets got a shot in the arm this week as we went from negative year to date returns across the board in all three indexes to now being positive for the year. At the close Friday, the Dow Jones Industrial Average now sits at a 2.2% gain on the year after rising 3.7% this week. The S&P 500 is now up 2% YTD after gaining roughly 2.9% this week. The Nasdaq 100 is up 1.7% on the year after a 2.4% gain in the week. This came as treasury yields all declined mainly due to the Consumer Price Index coming in cooler than expected. CPI core came in at 3.2% vs. expectations of 3.3% which is just what the market wanted to see in order to rally and marked the first decline since July of last year. Bond yields have dropped sharply (10-yr Yields lower by 10 bp) along with the US Dollar as well. Finally, as we started earnings season with the major banks and it was easy to say that we are off to a strong earnings across the board. Company Specific / Micro Economic Summary JP Morgan Chase (JPM) Shares rose 2% as the leading U.S. bank reported a top and bottom-line beat. Earnings per share of $4.81 completely blew the estimates of $4.04 out of the water! Revenues of $42.8 billion were also way ahead of the Wall Street analyst calls for $41.6 billion. CEO Jamie Dimon said all business lines posted solid results in the quarter. Consumer banking added nearly 2 million net new customers, wealth management fees rose 21%, payment fees grew double digits helping drive revenue to $18.1 billion on the year. Dimon also seemed optimistic of the bank’s fortress balance sheet as we should see some easing of regulations under the Trump administration. Citi Bank ( C ) Shares rallied over 7% as CEO Jane Fraser delivered a strong quarter. Earnings per share of $1.36 were twelve cents higher than the estimates of $1.24. Revenues of $19.6 billion were also ahead of the calls for $19.5 billion. Mrs. Fraser said 2024 was a key year towards delivering on her promises to drive strong business performance. Net income was up 40% to $12.7 billion, driving costs down helped the bank return over $7 billion of capital to shareholders and allowed the board to approve a new $20 billion stock buy back program. Wells Fargo (WFC) Shares rose 7% despite the bank reporting a mixed quarter. Revenues came in at $20.4 billion while analysts expected $20.6 billion. Earnings per share of $1.48 were better than the $1.35 most experts were looking for. CEO Charlie Scharf highlighted the OCC (Office of the Comptroller of the Currency) terminated the consent order that was issued in 2016 regarding sales practices. As the bank heads into 2025, Charlie believes its still in the early stages of the momentum they’re building and financial performance should continue to benefit from the work they are doing to transform the company. Taiwan Semiconductor Manufacturing (TSM) Shares rallied 5.46% as the chip fabrication company reported a top and bottom-line beat. Earnings per share of $14.5 beat Wall Street expectations of $14.3. Revenues of $868 billion also came in ahead of the estimates of $856 billion. CEO C.C. Wei said the company saw robust AI related demand. He also mentioned that that despite AI accelerator revenue having tripled in 2024, he believes it should still double in 2025 as a strong surge in AI-related demand continues. I’ll remind readers that TSM is a base materials provider to Nvidia and this bodes well for its earnings report in February. Parting Thoughts Earnings season is a off to a hot start and this bodes well for the remaining Q1 reports! We welcome an opportunity to discuss the above detail and wish you much success in the rest of your week! Regards, Erick J. Palacios, MBA Wealth/Fiduciary Advisor