Stocks finished lower on Friday but logged weekly gains across the board while shares of JPMorgan (JPM) rallied more than 7% following a strong quarterly earnings report.
At the closing bell on Friday the S&P 500 (^GSPC) was off 0.21%, theDow Jones Industrial Average (^DJI) was down 0.42%, and the tech-heavy Nasdaq Composite (^IXIC) fell 0.35%.
All three major indexes finished the week with gains with the Dow rising more than 1% to pace the week’s gains.
JPMorgan (JPM) and Citi (C) saw shares higher on Friday while Wells Fargo (WFC) stock was little changed and PNC Financial (PNC) shares were under pressure after each bank reported results before the open on Friday.
JPMorgan’s 7.5% gain on Friday marked the stock’s biggest one day rally since November 2020.
Economic data also had markets moving on Friday with the preliminary look at consumer sentiment in April from the University of Michigan signaling an uptick in consumer inflation expectations, which investors took as a sign the Federal Reserve will need to remain vigilant in keeping interest rates elevated.
Consumer expectations for price increases over the next year rose to 4.6% from 3.6% last month, the report showed. Stocks forfeited gains following these headlines and steady selling in the major indexes pushed stocks to session lows in early afternoon trade before an afternoon rebound.
“These expectations have been seesawing for four consecutive months, alternating between increases and decreases,” said Joanne Hsu, director for the survey of consumers. “Uncertainty over short-run inflation expectations continues to be notably elevated, indicating that the recent volatility in expected year-ahead inflation is likely to continue.”
Overall, the report showed sentiment was “essentially unchanged” in April, as the index stood at 63.5, up from 62 at the end of March. This data came about an hour after Fed Governor Chris Waller reiterated in a speech that inflation remains “much too high.”
Elsewhere on the economic calendar the monthly report on retail sales showed sales fell 1% in March while industrial production data came in better than expected.
“Overall, [retail sales were] not quite as bad as we had expected,” wrote Paul Ashworth, chief North America economist at Capital Economics. “Thanks to the strong January, first-quarter real consumption growth should be close to 4.5%, with GDP growth at 1.8%, which might be enough to persuade the Fed to hike by a final 25bp in early May.”
Banks results shine
JPMorgan, the country’s largest bank by assets, saw shares rise more than 7% after reporting top- and bottom-line results that surged from the prior year.
Deposits, which will be closely tracked by investors this quarter following the failure of three US banks in March, rose 1.5% over the quarter at JPMorgan. Compared to the same period last year, however, deposits fell 7%.
In the company’s earnings release, CEO Jamie Dimon said, “the U.S. economy continues to be on generally healthy footings—consumers are still spending and have strong balance sheets, and businesses are in good shape. However, the storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks.”
Jamie Dimon, CEO of JPMorgan Chase, arrives for the Senate Banking, Housing, and Urban Affairs Committee hearing titled Annual Oversight of the Nations Largest Banks, in Hart Building on Thursday, September 22, 2022. (Tom Williams/CQ-Roll Call, Inc via Getty Images)
Wells Fargo also reported top- and bottom-line results that rose against the prior year, with revenues topping $20.7 billion in the first quarter.
Consumer deposits fell 5% from the prior year while commercial banking deposits were off 15% from the first quarter of 2022. Wells Fargo reported its loans extended to commercial clients rose 15% from the same period last year.
Wells Fargo CEO Charlie Scharf said in a release, “We are glad to have been in a strong position to help support the U.S. financial system during the recent events that impacted the banking industry.”
Citi reported income and revenue that rose 7% and 12% from the prior year, respectively, while highlighting its deposits stood at $1.3 trillion at end of the quarter, “largely unchanged” from the prior year, the company said in its release. CEO Jane Fraser said the company’s performance came “despite the tumultuous environment for banks.”
Elsewhere on the earnings side, BlackRock’s (BLK) results showed the impact last year’s market turmoil had on investors as the firm’s average assets under management dipped below $9 trillion during the first quarter, down from $9.7 trillion in the same quarter last year. Revenue at the asset management giant also fell 10% from last year to $4.24 billion.
“BlackRock is a source of both stability and optimism for clients,” CEO Larry Fink said in a release. “We are helping clients navigate volatility and embed resiliency in their portfolios, while also providing insights on the longterm opportunities to be had in today’s markets.”
Elsewhere on the earnings calendar, shares of UnitedHealthcare (UNH) fell more than 2% after the company reported results that topped estimates and raised its 2023 full-year outlook.
Shares of Boeing (BA) weighed on the Dow as the stock fell more than 5% on Friday after the company announced it would halt deliveries for some 737 Max planes.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
