Stocks Lack Direction After Big Banks Earnings, Crude Oil Surged 4%

Barry Adams
13 Oct, 2023
New York City

Benchmark indexes traded down as investors reviewed the latest earnings from big banks. 

JPMorgan Chase and Wells Fargo reported a rise in revenue on the back of rising interest rates and Citigroup reported flat earnings. 

Big banks passed on higher interest rates to customers but depositors were not rewarded with higher interest rates. 

The worries of recession and weakening commercial real estate market set the tone for credit provisions and banks generally faced higher losses in the real estate loan portfolios. 

Crude oil surged more than 3% on the worries of widening conflict in the Middle East as Israel ordered evacuation of 1.1 million in the occupied northern Gaza. 

Investors feared that the Israeli military offensive as early as this weekend may draw neighboring nations in the latest conflict with Hamas. 

 

U.S. Indexes & Yields 

The S&P 500 index increased 0.2% to 4,374.16 and the Nasdaq Composite eased 0.3% to 13,306.74. 

The yield on 2-year Treasury notes increased to 5.02%, 10-year Treasury notes inched lower to 4.60% and 30-year Treasury bonds edged up to 4.76%. 

Crude oil prices were in focus on the worries that the latest  flare up between Israel and Hamas may spread to neighboring oil producing states and disrupt global oil supply. 

Crude oil decreased $3.75 to $86.67 a barrel and natural gas prices eased 6 cents to $3.27 a thermal unit. 

The dollar index edged higher to 106.46, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.  

 

U.S. Stock Movers 

JPMorgan Chase & Company increased 1.1% to $147.49 after the bank reported a surge in revenue and earnings in the third quarter. 

The bank benefited from higher interest rates and lower provision for credit losses. 

Revenue increased 22% to $39.8 billion $32.7 billion and net income soared 35% to $13.2 billion from $$9.7 billion and diluted earnings per share advanced to $4.33 from $3.12 from a year ago. 

Net income attributable to First Republic was $1.1 billion in the quarter. 

The bank set aside $1.3 billion for potential credit losses compared to the $2.39 billion estimate. 

Wells Fargo & Company advanced 2.4% to $40.70 after the bank reported a surge in net interest income in the third quarter. 

Total revenue increased to $20.8 billion from $19.6 billion and net income advanced to $5.7 billion from $3.6 billion and diluted earnings per share surged to $1.48 from 86 cents a year ago. 

Provision for credit losses increased to $1.2 billion from $784 million a year ago. 

The company repurchased 33.8 million shares of $1.5 billion of its common stock in the third quarter. 

Citigroup Inc advanced 2.4% to $42.85 after the bank reported a surge in earnings on the back of higher interest rates in the third quarter. 

Revenue in the third quarter increased 9% to $20.1 billion from $18.5 billion and net income increased 2% to $3.54 billion from $3.47 billion and diluted earnings per share was unchanged at $1.63 compared to a year ago. 

Citigroup's total allowance for credit losses was approximately $17.6 billion compared to $16.3 billion at the end of the quarter a year ago , with a reserve-to-funded loans ratio of 2.68%, compared to  2.54% at the end of the prior-year period 

Activision Blizzard Inc jumped 0.1% to $94.64 after the UK regulator approved the purchase of the company by Microsoft Corp. 

Microsoft edged lower a fraction to $330.98.