US stock futures 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.
Futures on the tech-heavy Nasdaq 100 (^NDX) slid 0.5%, while S&P 500 (^GSPC) futures shed 0.4%. Contracts on the Dow Jones Industrial Average (^DJI) fell 0.3%.
BlackRock (BLK) results got earnings season underway early Friday amid hopes that corporate updates can revive the early-year rally in stocks. The world’s biggest asset manager’s shares popped in premarket after it posted a 36% jump in profit.
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 amid inflation concerns.
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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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