The stock market bolted higher as earnings reports from banks and some healthcare companies came in much better than expected. This positive start to the earnings season, combined with positive comments by China over last Friday’s phase one trade deal, pushed the Dow to a closing gain of 237 points to 27,024. Trading volume jumped but this was expected given yesterday’s low-key holiday activity.
Several big financial firms reported earnings before the bell. Here are some highlights. JP Morgan Chase blew the doors off estimates with an increase in revenue of 10% which was double the gains that gurus had projected. Net income increased 15%. Strength in consumer finance and fixed income trading led the way. Wells Fargo reported mixed results with a 4% revenue gain and a 5% decline in net income. Net income was lower due to falling net interest margins. The bank is still in recovery mode from the account scandal 3 years ago but appears to be making progress. Citigroup posted a 5% revenue gain and a 20% increase in net income. The combined deposits of these three banks, not including wealth management assets, continued to rise and now stands at $3.9 trillion dollars.
The price of gold fell after reports of a possible deal between the UK and EU that would avoid a “no-deal” hard Brexit on October 31st. The threat of an abrupt divorce between Britain and Europe was behind a surge in European demand for gold and a deal could cause funds to flow back into risk assets. Gold finished the day off over $12 at $1,485 an ounce.