The launch of earnings season turned into a nasty picture for financials Friday as JPMorgan collapsed below critical levels of support, while Citigroup and BlackRock posted ugly reversals. JPMorgan Chase tanked toward its biggest loss since March after guiding net interest income below forecasts and raised its expense outlook. Citigroup (C) and BlackRock surrendered early gains and joined the sell off following their reports. Well Fargo traded modestly lower, while State Street (STT) pared its early surge.
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Weak outlooks and rising costs rattled bank investors watching volatile currency markets Friday. Reversals and losses among bank stocks caused some notable chart damage, and put investors on-guard for the unfolding earnings reporting season with Goldman Sachs (GS), Charles Schwab (SCHW) and Bank Of America (BAC) among the financials due to report early next week.
JPMorgan Chase
Dow Jones member JPMorgan‘s (JPM) reported a 7.6% earnings increase $4.44 per share. The quarterly earnings included a 19 cent decrease due to the FDIC special assessment. Adjusted earnings for the quarter were $4.63 per share. The bank reported net revenues rose 9% to $41.93 billion.
FactSet analysts expected earnings to increase 1.7% to $4.17 per share on 8.7% revenue growth to $41.69 billion.
Net interest rose 11% year-over-year to $23.08 billion, but declined from $24.05 billion in the fourth quarter.
Provisions for credit losses fell to $1.88 billion, from $2.76 billion in Q4 and $2.28 billion in Q1 2023, respectively.
However, JPMorgan maintained its 2024 net interest income guidance of around $90 billion, while analysts expected the bank to raise it by $2 billion to $3 billion, CNBC reported. The bank also raised its expense outlook to $91 billion for 2024 from its previous guidance of $90 billion during its Q4 report.
JPMorgan’s earnings and revenue growth both slowed over the past two quarters.
JPM stock swooned 6.5% Friday carving support at its 10-week moving average, and flashing sell signs to investors.
The stock had run up 18% through March, then eased to a 7.5% year-to-date gain through Friday’s close. JPMorgan hit a record high of 200.94 on April 1.
Wells Fargo
Wells Fargo (WFC) reported a 2.3% earnings decline to $1.20 per share while total revenue rose about 1% to $20.86 billion.
Analysts predicted earnings to fall 13.8% to $1.06 per share on a 2.5% revenue decline to $20.19 billion.
Net interest income decreased 8% year-over-year to $12.23 billion. Wall Street predicted net interest income to fall 7.8% year over year to $12.37 billion, and down from $12.77 billion from last quarter.
The bank’s provision for credit losses decreased 22% year-over-year to $938 million, also down from $1.28 billion in Q4.
Wells Fargo’s earnings fell over the last three quarters to a 16% drop in Q4 from a 51% increase in the second quarter.
WFC stock dropped more than 2% in early trade Friday. It then pared losses to a fraction, but was unable to regain support at its 21-day exponential moving average.
Wells Fargo hit a two-year high of 58.44 on March 13 following its Jan. 30 breakout. The stock has consolidated gains over the past two weeks, narrowing the distance to its 50-day moving average. Shares are 3% off their March 13 high.
WFC stock climbed 14.7% in 2024.
Citi
Citi reported a nearly 28% decrease in earnings to $1.58 per share. Revenue slid 2% year-over-year to $21.1 billion.
Analysts predicted earnings to fall 46% to $1.18 per share while revenue declined 4.6% to $20.46 billion.
Net interest income rose 16% year-over-year to $594 million, also up 7% from last quarter.
Citi repurchased $500 million worth of shares in the first quarter and said it will continue to evaluate buybacks on a quarterly basis.
The bank’s revenue growth declined over the past three quarters to a 31% gain in Q4 from a 75% increase in Q1 2023.
C stock peaked at 63.90 on April 1, the highest level for the bank stock since February 2022, after a March 7 breakout.
Citi rallied more than 10% on the breakout but has fallen back to just 3% above the 57.95 buy point.
Shares jumped in early trade, then fell back to a 1.7% loss Friday. Citi rose 0.9% Thursday and attempted to find support at their 21-day line. C stock has jumped 16% in 2024.
BlackRock, State Street
BlackRock (BLK) reported a 24% increase in adjusted earnings to $9.81 per share while revenue rose 11% to $4.73 billion. Diluted earnings increased 37% to $10.48 per share.
FactSet expected BlackRock’s adjusted earnings to jump 18% to $9.39 per share on 9.6% revenue growth to $4.65 billion.
Assets under management increased 15% year-over-year to a record $10.47 trillion.
BlackRock’s earnings growth slowed over the past two quarters. Revenue has accelerated over that period.
Elsewhere, BlackRock’s Larry Fink faces a proxy vote to split his chairman and CEO roles following a challenge from activist investor Bluebell Capital Partners, the Financial Times reported last Friday. The activists claim that BlackRock’s 17-member board is too large and that there has been a failure to provide independent oversight of management. Voting on the matter will take place on May 15 during BlackRock’s annual meeting.
BLK stock fell 2.9% Friday after swinging 2.7% higher premarket. Friday’s move put BlackRock 7% below an 819 buy point for a flat base following its Feb. 23 breakout, which triggered the automatic sell rule. Shares on April 4 tumbled below their 50-day line on a 101% spike in daily trade volume, which is also a sell indicator.
State Street
State Street reported earnings declined 10% year-over-year to $1.37 per share. Excluding notable charges, adjusted earnings for the quarter $1.69 per share. Total revenue inched up 1% to $3.13 billion.
Wall Street expected adjusted earnings to ease 1.3% to $1.50 per share while total revenue ticked down the same amount to $3.06 billion.
Assets under management jumped 20% from last year to a record $4.34 trillion.
The company’s earnings and revenue fell the past two quarters, although the declines have slowed.
STT stock bolted almost 7% higher early Friday, then slid back to a 2.5% gain. The stock rebounded off support at its 50-day moving average on results to jump above its 21-day line.
State Street shares are down 2.2% so far this year.
Meanwhile, regulators are probing BlackRock, State Street and Vanguard over their influence on U.S. banks, the Wall Street Journal reported on April 2. Regulators want to ensure the firms, which manage more than $23 trillion in assets, maintain a passive role regarding their investments. BlackRock and Vanguard each hold more than 10% of shares in various banks — a critical threshold for regulators.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
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