Stocks stumbled on Friday as techs lost their winning ways, with investors looking for inspiration in the big bank results rolling in to kick off earnings season.
The tech-heavy Nasdaq Composite (^IXIC) slid 0.9%, while the S&P 500 (^GSPC) shed 0.7%. The Dow Jones Industrial Average (^DJI) fell 0.6%, or more than 200 points.
BlackRock (BLK) results got earnings season underway before the bell on Friday, amid hopes that corporate updates can revive the early-year rally in stocks. Shares of the world’s biggest asset manager pared premarket gains to trade just in the red, after the company posted a 36% jump in profit.
JPMorgan’s (JPM) shares fell after its profit beat targets as CEO Jamie Dimon flagged “inflationary pressures” and Federal Reserve policy as concerns. Wells Fargo (WFC) and Citigroup (C) traded in the green after their reports.
Meanwhile, precious metals continued to shine: Gold (GC=F) rallied above $2,400 to hit another fresh record, and silver (SI=F) traded at its highest since early 2021. Demand is seen as driven by investors seeking safety amid heightening Middle East tensions but shunning US government bonds in the face of inflation concerns.
Stocks lost ground on Friday as tech names lost momentum and investors braced for the first wave of earnings season, with big bank results starting to roll in.
The tech-heavy Nasdaq Composite (^IXIC) lost 0.9%, while the S&P 500 (^GSPC) shed 0.7%. The Dow Jones Industrial Average (^DJI) fell 0.6%, or more than 200 points.
Jamie Dimon makes a good point to Yahoo Finance on interest rates
Fun call just now with reporters with JPMorgan (JPM) CEO Jamie Dimon and CFO Jeremy Barnum.
The topic, of course, was earnings but also Dimon’s views on rates and the economy.
Dimon made a good point to me on rates. (I had asked Barnum about how the firm is preparing for “higher for longer” interest rates):
“I just want to point out that rates being higher on their own isn’t that important. What is important is why — is it because of stagflation? That’s obviously a negative. Or is it because of healthy growth? That’s actually pretty good.”
Dimon went on to say he is not “predicting” a recession.
Early trend call out from bank earnings: investment banking
One division jumps right off the earnings posts from JP Morgan (JPM) and Wells Fargo (WFC) this morning.
Investment banking.
JP Morgan saw investment banking sales rise 27% from the prior year, fueled by higher debt and equity underwriting fees.
Wells Fargo’s investment banking revenue rose 69% year over year.
Sign of more M&A and IPOs coming this year? Let the debate begin.
It’s hard to pooh-pooh these BlackRock earnings
One should always be hyper-critical of an earnings report and an earnings call. Question everything, good and bad.
That said, I am having trouble tossing cold water on these results out of BlackRock (BLK) this morning. In their simplest form, here is a giant asset manager that grew assets under management (AUM) by $1.4 trillion year over year to $10.5 trillion. At the same time, the company’s more watchful eye on expenses drove a 180 basis point improvement in operating margins versus a year ago.
Can’t get much better than that, given the size of a BlackRock.
Shares are up close to 2% pre-market, deservedly so.
Inside the Apple trade
Apple’s (AAPL) ticker has found its way back to the Yahoo Finance ‘Trending Ticker‘ page to end the week.
The stock popped on Thursday on a report the company is refreshing its Mac line with new AI-enabled chips. Seems like good news, which may only embolden the bulls kicking the tires again on the tech giant’s stock after a 9% year-to-date drop.
Why the stock has lagged reflects multiple reasons, neatly presented by JP Morgan analyst Samik Chatterjee in a new client note.
Chatterjee says iPhone sales data is “highlighting headwinds” including in China. There is also concern about downside risk to Apple’s services business amid “higher regulatory scrutiny in multiple geographies.”
But these worries are now mostly baked into the stock price, contends Chatterjee.
He says investors are starting to warm up to Apple:
The stock’s valuation premium to the broader market has moderated — the stock’s valuation is now at the lower end of multiples the shares have traded at recently since the launch of the iPhone 12.
There is “increasing appetite from investors” in Apple as an “AI upgrade cycle” stock play.
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