U.S. Indexes Struggle Near Flat Line, Banks Report Higher Earnings

Nichole Harper
16 Jan, 2013
New York City

Stocks in New York traded sideways after banks report rising earnings. JP Morgan, M&T, Northern Trust and US Bancorp report higher earnings. Boeing declined after Japanese airlines ground fleet of 787 Dreamliners. Consumer prices were unchanged in December.

[R]12:10 PM New York – Stocks in New York traded sideways after banks report rising earnings. JP Morgan, M&T, Northern Trust and US Bancorp report higher earnings. Boeing declined after Japanese airlines ground fleet of 787 Dreamliners. Consumer prices were unchanged in December.[/R]

Stocks in early trading in New York pared gains and Boeing weighed heavily among trading in large companies.

After two hours of trading, the S&P 500 index recovered to a loss of 0.14 to 1,472.17 from the declined of as much as 5 points of 0.5%. The Nasdaq Composite Index gained 0.2% or 7.13 to 3,118.04.

Boeing fell after two Japanese airlines grounded all of its 787 model Dreamliner after another incidence of instrument panel malfunction that forced an emergency landing at ANA flight in Western Japan.

Japan Air and ANA operate half of all 50 Dreamliners sold in the world and the state-of-the art plane from the Boeing has come under sharp focus and prompted a regulatory inquiry last week.

Consumer prices were flat in December according to the latest data from the Labor Department.

The consumer prices increased 1.7% in 2012 after rising 3% in 2011.

Food prices increased 0.2% in December from a month ago and gasoline prices fell 2.3% after adjusting for seasonality.

Excluding food and energy prices core inflation increased 0.1% in December from November. For all of 2012, core prices increased 1.9%, below the target price increase of 2%.

Separately, Federal Reserve said factory output increased 0.8% in December from a month ago after rising 1.3% in November.

Total industrial production increased 0.3% in December after rising 1% in November and the growth declined after utilities output dropped 4.8% on warmer than usual weather.

Stocks in Review

Chipotle Mexican Grill ((CMG)) declined 5.7% to $280.43 after the restaurant chain said fourth quarter sales in the fourth quarter are ahead of expectations but higher food costs would cut in earnings.

Wendy’s ((WEN)) gained 2% to $5 after the fast food chain operator reported stronger than expected earnings and estimated 2013 earnings ahead of expectations.

JPMorgan Chase & Co. ((JPM)) declined 1% or 47 cents to $45.92 after the financial holding company said total net revenue in the fourth quarter ending in December advanced 10% to $24.4 billion from $22.2 billion in the same period of last year. Net income in the quarter soared 53% to $5.7 billion or $1.39 per diluted share compared to $3.7 billion or 90 cents a share a year ago earlier.

The company said credit card sales volume increased 9% to $101.6 billion and credit card loans slid 3% to $124.7 billion. Assets under custody increased 12% to $18.8 trillion. Commercial Banking unit reported record revenue loan growth for the tenth consecutive quarter to a record $128.2 billion, an increase of 14%.

The board cut CEO Jamie Dimon’s pay in half and said in a statement that ultimate responsibility lies with his office.

The statement noted, “As chief executive officer, Mr. Dimon bears ultimate responsibility for the failures that led to the losses” and added Dimon “has accepted responsibility for such failures.”

Dimon was paid $11.5 million in 2012 that included $1.5 million in salary and restricted stock units worth $10 million. In 2011, he was awarded $21.5 million in restricted stocks and the same salary.

M&T Bank Corporation ((MTB)) slipped 28 cents to $103.17 after the bank holding company stated net income in the quarter increased 5% to $296.2 million or $2.16 per diluted share compared to $147.7 million or $1.04 a share a year ago quarter.

Northern Trust Corporation ((NTRS)) declined 4.6% or $2.43 to $50.38 after the financial services company said total revenue in the fourth quarter ending in December grew 1% to $969.7 million from $955.6 million in the same period of last year. Net income in the quarter jumped 29% to $167.7 million or 69 cents a diluted share compared to $130.2 million or 53 cents a share a year ago period.

Net interest income for the quarter dropped 13%, reflecting lower average earning assets and continued decline in the net interest margin to 1.17% from 1.28% a year ago.

The Goldman Sachs Group, Inc ((GS)) gained 1.8% or $2.45 to $138.09 the investment bank reported total net revenue in the fourth quarter ending in December jumped 53% to $9.24 billion from $6.05 billion in the same period of last year. Net earnings in the quarter surged nearly three-fold to $2.83 billion or $5.60 per diluted share compared to $978 million or $1.84 a share a year ago.

The bank added net revenues in the quarter in investment banking soared 64% and institutional client services revenues increased 10%. Net revenues in investment management climbed 20%.

The Bank of New York Mellon Corporation ((BK)) dropped 3.8% or $1.03 to $25.75 after the regional bank said revenue in the fourth quarter 3% to $2.85 billion from $2.76 billion in the same period of last year. Net income in the quarter climbed 23% to $622 million or 53 cents per diluted share.

U.S. Bancorp ((USB)) slid 15 cents to $33.15 after the banking and leasing company said total interest income in the fourth quarter slid 1% to $3.2 billion from $3.22 billion in the same period of last year. Net income in the quarter increased 5% to $1.42 billion or 72 cents per diluted share.