From Wall Street to Main Street Highlights from the past week
Market / Macro Economic Summary
Markets had a tough week as CPI data came in one tenth higher than expected on Wednesday thereby pushing delays for the expected rate reductions to take place. Then, the Producer Price Index (PPI) came in tamer than expected lifting stocks. Friday, though, brought a more negative day as tensions in the Middle East and bank earnings left a little to be desired. The S&P 500 fell 1.6%, the Nasdaq .5% and the Dow Jones 2.4% for the week. I will say that while this volatility might not be liked by most, I do think it’s good sign for the markets. Markets shouldn’t just go up all of the time; there should be instances where it trades sideways for a bit to adjust, then it can go higher. I think this is what we’re in the middle of now.
Company Specific / Macro Economic Summary
JP Morgan Chase (JPM) Shares dropped 6% as the bank delivered a good quarter, but comments from CEO Jamie Dimon put a cloud on the coming months. Earnings per share of $4.44 were much better than the expectations for $4.11 on the back of the increase attributed to the First Republic Bank merger. Revenue also came in above estimates as the $42.55 billion were also higher than the $41.85 billion analysts were looking for. The main culprit for the decline was that, despite the beats, the bank did not increase its yearly guidance for 2024 for net interest margin from the previous guide of $90 billion. Delta (DAL) Shares fell 2% as the company reported a mixed quarter. Earnings came in at $380 million, or 45 cents a share, up from $217 million, up 75% from a year earlier. It easily topped Wall Street analysts’ consensus forecast of 36 cents a share. Revenue, however, came in at $12.56 billion versus the estimates of $12.59 billion. CEO Ed Bastain said leisure and business travel remain strong as the peak season for travel comes in the coming months. Citigroup Inc ( C ) Shares fell 2% on a day when most of the market was lower and ignored the bank’s top and bottom-line beat. Earnings per share of $1.86 came in better than the expectations of $1.23. Revenue of $21.10 billion also beat the calls for $20.4 billion for the quarter. CEO Jane Fraser said the next quarter would see an end to the corporate restructuring and get back to the business of focusing on growth. Wells Fargo (WFC) Shares fell 2.5% as the bank reported a top and bottom-line beat. Earnings per share of $1.26 came in higher than Wall Street calls for $1.11. Revenue of $20.86 billion came in above the calls for $20.20 billion. Net interest margin did decrease 8% as the bank saw customers moving deposits towards higher yielding accounts like CD’s and other deposits. Parting Thoughts We welcome an opportunity to discuss the above detail and wish you much success in the rest of your week! Regards, E.Palacios Erick J. Palacios, MBA