Banks' earnings in focus; US stocks remains near record highs

Summary:

• Major banks report latest trading results

• Goldman Sachs, JP Morgan and Wells Fargo in focus

• Broader market still near ATH after retail sales beat

Earnings season is now in full swing with a series of major corporations reporting their latest trading updates ahead of the opening bell. Banks in particular are in the spotlight with no fewer than 3 of the big Wall Street firms announcing their latest results and elevated levels of volatility can be expected in these stocks when the begin to trade at the bottom of the hour. The following are selected highlights from their Q2 numbers: 

Goldman Sachs

EPS: $5.81 vs $4.89 exp

Revenue: $9.46B vs $8.83B exp

On the whole this looks like a solid set of results for Goldman with a beat on both the top and bottom line. Furthermore, the firm raised its quarterly dividend to $1.25 per share from $0.85 as well as authorizing a share repurchase programme which totals sum $7B - up from $5B a year ago. One blot may be the fact that total revenue was down 2% compared to the same quarter last year but on balance the update is quite positive and the stock is called to open higher by more than 1% this afternoon.

Goldman shares look set to receive a boost from the latest earnings figures and the stock remains in breakout territory above 209 and the 50% Fib. Source: xStation 

JP Morgan

EPS: $2.82 vs $2.50 exp

Revenue: $29.57B vs $28.9B exp

A record profit of $9.65B for the second quarter marks an increase of 16% on the same period last year and also means a decent beat on the consensus forecasts. However a fair chunk of this ($0.23 per share) came from presumably one-off benefits from Trump’s tax cuts and as such may be seen as not so sustainable. With revenue also beating the most widely viewed metrics were positive but a lowering of the 2019 forecast for net interest income has taken the shine off what otherwise is a solid update. The bank now expects $57.5B net interest income this year, $500,000 lower than expected at the end of the last quarter. Traders have seemingly focused on this in the pre-market with the stock trading lower by around 1.5%. 

JP Morgan shares have been range bound in recent years and are set to begin lower after a bearish engulfing candle was printed yesterday. 115.50 could be seen as key resistance. Source: xStation 

Wells Fargo: 

EPS: $1.30 vs $1.16 exp

Revenue: $21.6B vs $20.9B exp

Rounding off a hat-trick of beats, Wells followed suit in beating the street with both earnings and turnover exceeding analysts’ forecasts. In recent years several high profile scandals have rocked the firm but there are signs that the worst of it is potentially over. An uptick in lending with total loans rising 0.6% to $950B and further cost cuts show that the bank is making progress in  implementing its strategic overhaul, but as with both Goldman and JP there is a sense that this beat is perhaps more due to overly pessimistic forecasts rather than stellar performance. Shares are called to open marginally lower. 

Wells Fargo shares have been drifting lower in recent years and remain below the 200 day SMA. Source: xStation 

Finally, the broader indices remain close to their highest ever levels with the S&P500  experiencing a quiet session yesterday to start the week. A better than expected retail sales release this afternoon could be seen as mildly negative for the market with strong data potentially decreasing the chances of an easier monetary policy from the Fed. 

US stocks are near their all-time highs with the only point of reference above the recent peak of 3023. RSI remains pretty flat around the 70 level. Source; xStation