Wall Street Banks Start Earnings Season with a Bang
The Dow ends the week higher amid strong bank earnings and rising tensions
The Dow eked out a gain to end the week higher Friday, thanks to better-than-expected quarterly results from major Wall Street banks. Despite rising geopolitical tensions, investors remained focused on the positive earnings reports. The S&P 500 fell 1.2%, the Nasdaq slumped 0.5%, and the VIX fear indicator jumped 15%.
Major Wall Street banks exceed expectations
JPMorgan Chase & Co and Wells Fargo & Company rallied after reporting impressive third-quarter earnings. JPMorgan saw a 35% jump in earnings, driven by a surge in rates that boosted its retail banking profits. However, Citigroup Inc gave up gains and closed lower.
Earnings overshadow geopolitical tensions
Earnings are expected to dominate market moves, overshadowing geopolitical tensions and recent rate movements. According to Jim Bianco of Bianco Research, focusing on the earnings picture is crucial for stock market growth.
Energy stocks rise on surging oil prices and Russia sanctions
Energy stocks rose more than 2% due to a surge in oil prices after the US imposed sanctions on two tankers carrying Russian oil. This move came as geopolitical tensions escalated with Israel preparing for a ground assault in Gaza. APA Corporation, Marathon Oil Corporation, and EOG Resources Inc were among the biggest gainers.
Dollar General appoints former CEO as new leader
Dollar General announced the appointment of former Chief Executive Officer Todd Vasos as its new CEO, causing its shares to rise over 9%. Wall Street responded positively, expecting increased investments to navigate the current consumer spending landscape. Oppenheimer noted that Dollar General stock, down 50% year-to-date, is close to bottoming.
Tech and chip stocks face pressure
Big tech companies like Apple Inc, Meta Platforms Inc, Alphabet, and Microsoft Corporation put pressure on the broader market. Concerns about new US restrictions on chip exports to China also weighed on chip stocks, including Nvidia. The White House is reportedly considering additional measures to restrict Chinese companies’ access to AI chips from US companies.
Netflix downgraded ahead of earnings
Netflix shares fell 1.5% after being downgraded by Wolfe Research. The downgrade cited concerns about valuations and the potential for future growth to fall short. Wolfe Research highlighted that Netflix’s premium prices may not hold up if expectations aren’t met. The downgrade coincides with Netflix’s upcoming third-quarter earnings.
Microsoft completes Activision acquisition
Microsoft successfully acquired video game maker Activision for $69 billion after receiving final approval from the UK Competition and Markets Authority. To address antitrust concerns, Microsoft agreed to sell Activision’s non-European cloud streaming rights to French video game group Ubisoft Entertainment. The acquisition was completed ahead of the October 18 deadline.
With the earnings season off to a strong start, Wall Street is optimistic about the market’s future. Investors will continue to closely monitor earnings reports to gauge the overall health of the economy and the stock market.
