Techs lead slide as banks kick off earnings season

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• Fri, April 12, 2024 at 9:45 AM MDT

  The high interest rate challenge for banks

  High interest rates aren’t just squeezing consumers. Even the biggest financial institutions are feeling the impacts of the Fed’s tightening campaign.

  A key revenue source for three giant banks fell during the first three months of the year Yahoo Finance’s David Hollerith reports.

  JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) all said Friday that their net interest income dropped from the fourth quarter to the first quarter. It was down 4% at JPMorgan, 4% at Wells Fargo and 2% at Citigroup.

  Net interest income is a critical measure for many banks, since it measures the difference between what banks earn on their assets and pay out on their deposits.

  Smaller banks have struggled to boost this measure over the last year as interest rates and deposit costs soared. Now there are some signs in the first quarter that high rates are starting to weigh on growth even at the nation’s largest lenders.

• Fri, April 12, 2024 at 9:05 AM MDT

  Consumer sentiment falls slightly in April

  US consumer sentiment slightly declined in April while inflation expectations for the year ahead and beyond increased, fresh survey data showed on Friday.

  The overall index of consumer sentiment registered a preliminary 77.9 this month, according to he University of Michigan’s survey, compared to a reading of 79.4 in March.

  “Expectations over personal finances, business conditions, and labor markets have all been stable over the last four months,” said Surveys of Consumers Director Joanne Hsu in a statement.

  But the data showed a slight uptick in inflation expectation, rising to 3.1% from last month’s 2.9%, in what Hsu said reflects some frustrations that the comedown in accelerating prices has stalled.

  “Overall, consumers are reserving judgment about the economy in light of the upcoming election, which, in the view of many consumers, could have a substantial impact on the trajectory of the economy,” she said.

• Fri, April 12, 2024 at 8:45 AM MDT

  Stocks trending in morning trading

  Here are some of the stocks leading Yahoo Finance’s trending tickers page during morning trading on Friday:

  JPMorgan Chase (JPM): Shares of the banking giant shed 4% Friday morning after posting a rise in profits of 6% in the first quarter to $13.4 billion. But investors reeled at the economic warning offered by CEO Jamie Dimon, who said “looking ahead, we remain alert to a number of significant uncertain forces.” Dimon pointed to geopolitical tensions and “persistent inflationary pressures” that “may likely continue” and a campaign of quantitative tightening from the Federal Reserve.

  CITI: (C): After reporting a slump in profit for the first quarter, shares fell 0.2% after spending more on severance for laid-off workers and after dedicating money to replenish a government deposit insurance fund. Wells Fargo (WFC) rose 0.1% and BlackRock (BLK) lost 1% after they also reported earnings, laying out mixed results for the financial services sector.

  Morgan Stanley (MS): Shares continue to slide for the investment bank after the Wall Street Journal reported that federal regulators are probing how the company assesses wealth management clients “who are at risk of laundering money.” The stock was down 1% on Friday.

  Apple (AAPL): After months of largely sitting out the AI storyline Apple unveiled a strong AI push that has investors rejoicing. Shares of the iPhone maker rose 1% Friday, riding the momentum of a Bloomberg report that revealed the company will overhaul its Mac computer line to focus on artificial intelligence, adding $112 billion in value in its best performance in nearly a year.

• Fri, April 12, 2024 at 8:11 AM MDT

  Oil surges to touch 2024 high amid escalating Middle East tensions

  Oil futures surged as much as 3% on Friday on reports that Israel is preparing for an imminent attack by Iran on government targets as soon as Saturday.

  West Texas Intermediate (CL=F) futures rose to touch an intraday 2024 high of $87.30 per barrel, while Brent futures (BZ=F), the international benchmark price, touched a session high of $92.11 per barrel.

  “The escalation of tensions between Israel and Iran is also indicating to traders it may worsen before it gets better, and there seems to be a lot of option call buying as we go into the weekend which is keeping an upward pressure on futures prices,” Dennis Kissler, senior vice president at BOK Financial, wrote in a note to clients on Friday.

  Crude prices have been on an upward trend this year amid continued output cuts by oil alliance OPEC+ and tensions stemming from the Israel-Hamas war. Ukrainian drone attacks against Russian refineries have also impacted futures to the upside.

  WTI is up more than 21% year to-date, while Brent has gained roughly 20% during the same period.

• Fri, April 12, 2024 at 7:37 AM MDT

  Stocks tumble as banks kick off earnings season

  Stocks lost ground on Friday as tech names lost momentum and investors braced for the first wave of earnings season, with big bank results starting to roll in.

  The tech-heavy Nasdaq Composite (^IXIC) lost 0.9%, while the S&P 500 (^GSPC) shed 0.7%. The Dow Jones Industrial Average (^DJI) fell 0.6%, or more than 200 points.

• Fri, April 12, 2024 at 6:23 AM MDT

  Jamie Dimon makes a good point to Yahoo Finance on interest rates

  Fun call just now with reporters and JPMorgan (JPM) CEO Jamie Dimon and CFO Jeremy Barnum.

  The topic, of course, was earnings but also Dimon’s views on rates and the economy.

  Dimon made a good point to me on rates. (I had asked Barnum about how the firm is preparing for “higher for longer” interest rates):

  “I just want to point out that rates being higher on their own isn’t that important. What is important is why — is it because of stagflation? That’s obviously a negative. Or is it because of healthy growth? That’s actually pretty good.”

  Dimon went on to say he is not “predicting” a recession.

• Fri, April 12, 2024 at 5:43 AM MDT

  Early trend call out from bank earnings: Investment banking

  One division jumped right off the earnings posts from JPMorgan (JPM) and Wells Fargo (WFC) this morning.

  Investment banking.

  JPMorgan saw investment banking sales rise 27% from the prior year, fueled by higher debt and equity underwriting fees.

  Wells Fargo’s investment banking revenue rose 69% year over year.

  Sign of more M&A and IPOs coming this year? Let the debate begin.

• Fri, April 12, 2024 at 4:14 AM MDT

  It’s hard to pooh-pooh these BlackRock earnings

  One should always be hyper-critical of an earnings report and an earnings call. Question everything, good and bad.

  That said, I am having trouble tossing cold water on these results out of BlackRock (BLK) this morning. In their simplest form, here is a giant asset manager that grew assets under management (AUM) by $1.4 trillion year over year to $10.5 trillion. At the same time, the company’s more watchful eye on expenses drove a 180 basis point improvement in operating margins versus a year ago.

  Can’t get much better than that, given the size of a BlackRock.

  Shares are up close to 2% premarket, deservedly so.

• Fri, April 12, 2024 at 4:01 AM MDT

  Inside the Apple trade

  Apple’s (AAPL) ticker has found its way back to the Yahoo Finance Trending Tickers page to end the week.

  The stock popped on Thursday on a report the company is refreshing its Mac line with new AI-enabled chips. This seems like good news, which may only embolden the bulls kicking the tires again on the tech giant’s stock after a 9% year-to-date drop.

  The stock has lagged for multiple reasons, neatly presented by JPMorgan analyst Samik Chatterjee in a new client note.

  Chatterjee says iPhone sales data is “highlighting headwinds,” including in China. There is also concern about downside risk to Apple’s services business amid “higher regulatory scrutiny in multiple geographies.”

  But these worries are now mostly baked into the stock price, contends Chatterjee.

  He says investors are starting to warm up to Apple:

  • The stock’s valuation premium to the broader market has moderated — the stock’s valuation is now at the lower end of multiples the shares have traded at recently since the launch of the iPhone 12.

  • There is “increasing appetite from investors” in Apple as an “AI upgrade cycle” stock play.