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Ahead of this holiday season, market participants gather for a long feast — Q3 earnings season is now underway, with a full compliment of industries represented by some key publicly traded leaders. Aside from the Wall Street banks we’re seeing report this morning, this week brings us results from Netflix (NFLX - Free Report) , Johnson & Johnson (JNJ - Free Report) , Tesla (TSLA - Free Report) , IBM (IBM - Free Report) , American Airlines (AAL - Free Report) , American Express (AXP - Free Report) and Verizon (VZ - Free Report) .
This morning, we also see a new Empire State Manufacturing Survey for October, which brings us the seventh down month in the first 10 of the year: -9.1 is below the -5.0 expected and the -1.5 posted for September. While not good if we’re looking for productivity growth in New York state, it’s well off the pace of -31.3 we saw just in August, which was the deepest sink on this data since the early months of the pandemic. Then again, for most of 2021, we were between +20 and +40 on the Empire State Index.
In other economic data, Tuesday brings us Industrial Production and Capacity Utilization for September, Wednesday is Housing Starts and Building Permits, as well as a new Beige Book. Thursday offers weekly Jobless Claims, the Philly Fed survey and Existing Home Sales. None of these reports in and of themselves will have a chance to change the Fed’s notion that another 75 basis-point (bps) interest rate hike is in the cards for November 2nd (the next Fed meeting), but cumulatively they may add a new angle to the discussion.
Bank of America (BAC - Free Report) reported Q3 earnings ahead of today’s opening bell, beating on earnings by 2 cents per share to 81 cents, while revenues of $24.61 billion surpassed expectations by a cool billion dollars. Net interest income gained +24% in the quarter, while Fixed Income was +27%. Shares are up +3% on the news.
Bank of New York - Mellon (BK - Free Report) also reported positive surprises for its Q3 this morning, with earnings of $1.21 per share beating the +1.10 expected, +11% year over year. Revenues in the quarter of $4.28 billion improved over the Zacks consensus of $4.18 billion, +6% from this quarter a year ago. Net interest revenues grew +44% year over year, and shares are up +5% in early trading.
The big banks are benefiting from the higher interest rates from the Fed, and quarter over quarter there has been a big difference in how much banks find themselves able to charge. The Fed funds rate, after all, was 100 bps lower at the start of Q3 than it was at the end; apparently, we can expect similar innate gains in banking business in Q4 for precisely the same reason.
This is not to say Q3 earnings season is going to be a raging success, however; more industries feel the brunt of these interest rate hikes than benefit from them. But so far, so good: Pepsi (PEP - Free Report) and Delta Air Lines (DAL - Free Report) posted good reports last week. And the markets reflect this — at least to this early point in the day and week: the Dow is +350 points ahead of the open, the S&P is +50 and the Nasdaq is +160 points.
Image: Bigstock
Pre-Markets Up to Start a New Week
Monday, October 17, 2022
Ahead of this holiday season, market participants gather for a long feast — Q3 earnings season is now underway, with a full compliment of industries represented by some key publicly traded leaders. Aside from the Wall Street banks we’re seeing report this morning, this week brings us results from Netflix (NFLX - Free Report) , Johnson & Johnson (JNJ - Free Report) , Tesla (TSLA - Free Report) , IBM (IBM - Free Report) , American Airlines (AAL - Free Report) , American Express (AXP - Free Report) and Verizon (VZ - Free Report) .
This morning, we also see a new Empire State Manufacturing Survey for October, which brings us the seventh down month in the first 10 of the year: -9.1 is below the -5.0 expected and the -1.5 posted for September. While not good if we’re looking for productivity growth in New York state, it’s well off the pace of -31.3 we saw just in August, which was the deepest sink on this data since the early months of the pandemic. Then again, for most of 2021, we were between +20 and +40 on the Empire State Index.
In other economic data, Tuesday brings us Industrial Production and Capacity Utilization for September, Wednesday is Housing Starts and Building Permits, as well as a new Beige Book. Thursday offers weekly Jobless Claims, the Philly Fed survey and Existing Home Sales. None of these reports in and of themselves will have a chance to change the Fed’s notion that another 75 basis-point (bps) interest rate hike is in the cards for November 2nd (the next Fed meeting), but cumulatively they may add a new angle to the discussion.
Bank of America (BAC - Free Report) reported Q3 earnings ahead of today’s opening bell, beating on earnings by 2 cents per share to 81 cents, while revenues of $24.61 billion surpassed expectations by a cool billion dollars. Net interest income gained +24% in the quarter, while Fixed Income was +27%. Shares are up +3% on the news.
Bank of New York - Mellon (BK - Free Report) also reported positive surprises for its Q3 this morning, with earnings of $1.21 per share beating the +1.10 expected, +11% year over year. Revenues in the quarter of $4.28 billion improved over the Zacks consensus of $4.18 billion, +6% from this quarter a year ago. Net interest revenues grew +44% year over year, and shares are up +5% in early trading.
The big banks are benefiting from the higher interest rates from the Fed, and quarter over quarter there has been a big difference in how much banks find themselves able to charge. The Fed funds rate, after all, was 100 bps lower at the start of Q3 than it was at the end; apparently, we can expect similar innate gains in banking business in Q4 for precisely the same reason.
This is not to say Q3 earnings season is going to be a raging success, however; more industries feel the brunt of these interest rate hikes than benefit from them. But so far, so good: Pepsi (PEP - Free Report) and Delta Air Lines (DAL - Free Report) posted good reports last week. And the markets reflect this — at least to this early point in the day and week: the Dow is +350 points ahead of the open, the S&P is +50 and the Nasdaq is +160 points.
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