The US equities rose higher on the Friday market open after the big 4 Wall Street banks unveiled better-than-anticipated Q3 reports.
Friday the 13th was anything but unlucky for Wall Street’s biggest banks, with Wells Fargo (NYSE: WFC), Citi (NYSE: C), BlackRock (NYSE: BLK), and JPMorgan Chase (NYSE: JPM) posting better-than-expected Q3 financial results. The optimism spilled into the stock market, pushing benchmark indices, including Dow Jones and the S&P 500, higher at the opening bell.
Wall Street’s Biggest Banks Smash Expectations With Q3 Reports
On Friday, Wall Street’s largest banks unveiled their highly anticipated quarterly financial results, with each institution surpassing analysts’ expectations.
Wells Fargo, the multinational financial giant, posted robust earnings per share (EPS) of $1.48 (or $1.39 excluding discrete tax benefits), beating the consensus estimate. Moreover, their total revenue reached $20.9 billion, a solid 6.5% increase from the previous year’s third quarter and above the consensus projection of $20.1 billion.
Another banking behemoth, JPMorgan Chase, reported EPS at $4.33 and revenues of $40.69 billion, comfortably exceeding the LSEG revenue estimate of $39.63 billion. The bank’s profit skyrocketed by 35% despite a significant legal expense of $665 million.
BlackRock Inc., the largest asset manager in the world, disclosed a diluted EPS of $10.66 (or $10.91 adjusted) while posting revenue of $4.52 billion, slightly below consensus estimates. Its assets under management (AUM) surged by $1.1 trillion year-over-year, including $307 billion of net inflows.
Citigroup also joined the chorus of strong reports, with earnings per share of $1.63, beating expectations. Revenue reached $20.14 billion, also above the consensus estimates of $19.31 billion.
US Stocks Advance on Positive Bank Reports, Treasury Yields Ease
Before their reports were unveiled, some analysts braced for a challenging quarter for big banks, anticipating wide losses due to rising interest rates, compressed lending margins, and lower loan demand. These concerns were fueled by expectations of increased losses on banks’ bond portfolios and mounting funding pressures stemming from higher deposit rates.
Due to these headwinds, Christopher McGratty and David Konrad, analysts at KBW, expected banks’ per-share earnings to decline by 18% in the quarter. However, as seen from the above results, major banks have defied most expectations thanks to diversified revenue streams and their ability to adapt to higher interest rates.
The optimism surrounding the reports was also reflected in the market reaction. In particular, Wall Street’s benchmark stock indexes opened higher on Friday, with the Dow Jones Industrial Average (DJIA) climbing 0.7% to 33,863 and the S&P 500 edging 0.4% higher to 4,368. Meanwhile, US Treasury yields saw a slight pullback after a major spike in recent sessions.
Originally Posted October 13, 2023 – sAll Four Big Banks Report Strong Q3 Earnings, Stocks Advance
Disclosure: Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.
Disclosure: The Tokenist
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult a licensed financial advisor prior to making financial decisions.
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from The Tokenist and is being posted with its permission. The views expressed in this material are solely those of the author and/or The Tokenist and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.