The markets today pulled back on earnings news and geopolitical tensions. At the close the Dow lost 113 points on heavy trading to end the day at 20,523. The rally is still under pressure but caught in a tight trading range for now.
Bank of America reported earnings that were like a sea lion….i.e. “stellar”. Both top and bottom lines beat estimates by a wide margin. Revenues were up 7% and profits were higher by 46%. Trading revenue was up 29% and loan growth in the quarter was up 6%. Net loan charge offs were down 13% and the book value grew by 5%. The bank also increased its headcount for the first time in 5 years when they hired some guy at the Ballard branch. CEO Moynihan cited a strong economy and an optimistic consumer for the results. Up next for the BAC is the stress test results which should come in a month or so.
Goldman Sachs whiffed on earnings and while the numbers looked good on the surface they were disappointing. Revenue gained 31% and net income grew 92% but the gurus were concerned that Goldman did not execute well during the quarter and lost out to rivals like Apollo, JP Morgan and Citigroup. Revenue came in below estimates as did net profits. The markets punished the shares and sent them lower by about 4% helping drag down the Dow. Has Goldman lost its edge?
Big insurance provider United Healthcare reported numbers that were well received even as the company pulls back from offering products on the ACA state exchanges. Revenues were up 9% and net income gained 31%.
Oil prices were flat today with WTI crude at $52.61. Gold also traded at $1,292 up a buck. US interest rates continue to drop with the 10 year yield now at 2.17% as overseas tensions make treasuries more appealing. Ole Hansen at Saxo Bank said short term downside risks remain in equities and commodities but that there is underlying strength waiting in the wings. Go get ’em Ole!