US stocks resumed losses on Thursday after a rally in the previous session due to hopes of increasing profits in the market season. Investors are absorbing a wave of mixed quarterly reports from Wells Fargo (WFC), Goldman Sachs (GS), Morgan Stanley (MS) and Citigroup (C).
The S&P 500 fell 0.9%, heading for another week of losses. The Dow Jones industrial index retreated from a slight rise earlier in the session to stay below the plane. The Nasdaq Composite fell 1.7 percent, turning a 2 percent jump on Wednesday in its best session since March 18th. Meanwhile, government bond yields have risen forward, with the 10-year benchmark returning above 2.7%.
Shares of Twitter (TWTR) rose 13% in early trading after Tesla CEO Elon Musk offered to buy social media giant for $ 54.20 a share, or about $ 41 billion in cash, a new submission showed of the SEC on Thursday. Musk said the social media company, which he has often criticized, needs to go private to make effective changes.
Wall Street sentiment recovered on Wednesday after inflation scared investors to start the week. Traders weighed a wave of first-quarter profits on JPMorgan Chase (JPM), Delta Air Lines (DAL) and Bed, Bath & Beyond (BBBY).
Delta rose 6.2% despite another loss in its quarterly results after the airline said it had returned to profitability in March after Omicron’s strike on business and projected revenue to reach between 92% and 97% of pre-pandemic levels in this quarter. Meanwhile, JPMorgan shares fell 3.2% to their lowest level since January 2021, after the largest US asset bank reported a 42% drop in profit compared to last year due to losses due to higher inflation and Russia’s war in Ukraine. Bed, Bath & Beyond also fell after missing sales expectations.
The initial group of reports is ahead of a softer quarter for profit growth compared to previous periods. However, profits are expected to be a bright spot for investors, who for most of this year have struggled with sharp market fluctuations related to deteriorating geopolitical risk, inflationary pressures and fears that the tightening of funds could cause economic contraction as the Federal Reserve takes action. tariff plans for tourism.
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Analysts lowered their first-quarter earnings expectations by lowering their bottom-up earnings forecasts for the first quarter by 0.7 percent from $ 52.21 to $ 51.83, according to FactSet. On the other hand, EPS forecasts for the second quarter rose 1.6% from $ 55.16% to $ 56.07, 2.4% from $ 57.82 to $ 59.23 for the third quarter, 3.9% from $ 58.31 to $ 60.59 for the fourth quarter and fourth quarter. $ 223.43 to $ 227.80 for 2022 overall.
Economists at Bank of America in a note published this week also forecast a steady quarter of revenue despite gloomy macroeconomic headlines throughout the period.
“Leading signals and early reporters suggest a high probability of a decline in EPS in the first quarter,” said BofA, adding that the financial institution expects a decline of 4% or $ 53.50 compared to the consensus $ 51.54. However, the bank warned that analysts’ expectations for record margins in the coming quarters were “too high”.
“History suggests that oil shocks lead to lower consumption with a delay of three to four quarters, which shows a delay of 2 hours,” the note said.
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12:51 ET: All three indices stumble to negative during intraday trading
Here are the main market movements at 12:51 ET:
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S&P 500 (^ GSPC): -37.81 (-0.85%) to 4408.78
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Dow (^ DJI): -22.15 (-0.06%) to 34,542.44
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Nasdaq (^ IXIC): -234.79 (-1.72%) to 13,408.79
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Crude oil (CL = F): +0.36 $ (+ 0.35%) to $ 104.61 per barrel
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Gold (GC = F): – $ 11.60 (-0.58%) to $ 1973.10 per ounce
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10-year treasury (^ TNX): +12.3 bps for a yield of 2.8100%
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11:30 a.m. ET: Consumers are a little more optimistic in early April
Consumer sentiment in the United States unexpectedly returned in early April from the lowest decade, lifted by the positive outlook for wage growth amid a strong labor market and falling gasoline prices, limiting some inflation concerns.
The University of Michigan’s consumer sentiment index rose to 65.7 on a preliminary basis this month from a final report of 59.4 in March, the lowest since 2011. Economists polled by Bloomberg expected a reading of 59.
The improved outlook was boosted by a 29.4% jump in the economic outlook for the coming year and a 17.2% increase in personal financial expectations, according to study director Richard Curtin.
“The strong labor market has raised wage expectations among consumers under the age of 45 to 5.3%, the highest expected profit in more than three decades since April 1990,” he said in a statement.
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10:25 ET: Mortgage rates reach 5% to mark top of more than a decade
Mortgage rates have seen a staggering rise since the beginning of 2022, with the rate of the most common housing loan reaching a staggering 5% this week – the highest level since February 11.
The interest rate on the 30-year fixed mortgage jumped to 5% from 4.72% last week, according to Freddie Mac. A year ago at that time the cost of a 30-year loan averaged 3.04%.
In the last five weeks alone, the percentage has risen by 1.24 percentage points and is 1.89 percentage points higher than at the end of 2021.
“This week, mortgage rates have averaged five percent for the first time in more than a decade,” said Sam Hatter, chief economist at Freddie Mac. “As Americans struggle with historically high inflation, the combination of rising mortgage interest rates, rising house prices and limited stocks make the pursuit of home ownership the most costly for a generation.
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9:30 a.m. ET: Shares remain unchanged as investors absorb bank profits
Here are the main market movements at the beginning of Thursday’s trading session:
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S&P 500 (^ GSPC): +4.82 (+ 0.11%) to 4451.41
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Dow (^ DJI): +141.03 (+ 0.41%) to 34,705.62
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Nasdaq (^ IXIC): -12.24 (-0.09%) to 13,631.35
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Crude oil (CL = F): $ -1.53 (-1.47%) to $ 102.72 per barrel
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Gold (GC = F): – $ 4.20 (-0.21%) to $ 1980.50 per ounce
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10-year treasury (^ TNX): +3.3 bps for a yield of 2.7200%
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8:58 a.m. ET: Retail sales are rising despite rising price levels
US consumers continued to spend in March even amid inflationary pressures that led to a jump in the cost of food, gasoline and other basic products.
Retail sales in the United States rose 0.5% after a revised jump of 0.8% from January to February. Wage gains, solid hiring and more money in bank accounts fuel costs.
The January increase of 4.9% was the biggest jump in spending since March 2021, when US households received their last federal incentive check of $ 1,400.
The trade department said ordinary goods stores rose 5.4 percent, while clothing store sales jumped 2.6 percent. Online sales rose 6.4% and restaurant sales rose 1%.
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8:45 ET: Another 185,000 Americans filed new lawsuits last week
Unemployment insurance claims rose slightly more than expected in recent weekly figures, but remained close to the 54-year low found earlier this month.
The latest weekly report on unemployment claims from the Ministry of Labor shows that 185,000 lawsuits were filed in the week ending April 9, just over 170,000 economists polled by Bloomberg expected.
New claims from the previous week fell to the lowest level since 1968 – 167,000. This compares with an average of about 218,000 new claims filed per week in 2019 before the pandemic.
Given the jump and then decline in unemployment applications, the Ministry of Labor has also reconfigured the way it adjusts weekly data to take into account seasonal factors. Since last week, the Ministry of Labor has returned to the use of “multiplicative” seasonal corrective factors for the data. For most of the pandemic, the department has used “additional” seasonal adjustments to help smooth out large fluctuations in weekly numbers.
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8:15 a.m. ET: Citi’s profit drops 46% due to loan loss provisions and slower deals
Citigroup (C) saw a 46% drop in first-quarter profit as it hit provisions on Russia-related losses, declining collection fees and higher costs.
The bank’s headquarters added $ 1.9 billion to its reserves during the quarter to prepare for losses from direct exposures to Russia and the economic impact of the war in Ukraine. Citi is the most global of American banks. The move increased credit spending to $ 755 million, up from $ 2.1 billion a year ago when it released reserves for losses accumulated during the COVID-19 pandemic.
Citi reduced its exposure to Russia to $ 7.8 billion from $ 9.8 billion in December, while also lowering its worst-case loss estimate to no more than $ 3 billion, down from nearly $ 5 billion. billion valued last month.
Meanwhile, net income fell to $ 4.30 billion, or $ 2.02 per share from $ 7.94 billion, or $ 3.62 per share, a year earlier.
Citigroup shares rose 3% in pre-market trading.
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8:03 a.m. ET: Goldman Sachs reported a 42 percent drop in first-quarter earnings
Goldman Sachs (GS) halved its first-quarter profit in the first quarter due to a slowdown in capital market activity from levels in the same period last year that weighed heavily on the investment bank’s business.
Earnings applicable to ordinary shareholders fell to $ 3.83 billion, or $ 10.76 per share, in the quarter ended March 31, from $ 6.71 billion, or $ 18.60 per share, a year ago.
Total net revenue fell to $ 12.93 billion in the quarter, down nearly 27 percent from a year earlier.
“It was a turbulent quarter dominated by the devastating invasion of Ukraine,” CEO David Solomon said in a statement. “The fast-growing market environment had a significant effect on customer activity, as risk intermediation came to the fore and the issuance of shares almost stopped. Despite the environment, our quarterly results show that we have continued to effectively support our customers. ”
Shares of Goldman Sachs rose 1.3% in pre-market trading.
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7:52 AM ET: Morgan Stanley’s first quarter profit down 11% due to lower trading revenue
Morgan Stanley (MS) reported an 11% drop in first-quarter earnings after declining earnings from last year’s highs. However, the company reported a jump in revenue from consulting services due to higher levels of completed mergers and acquisitions.
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