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US Stock Market Overview – Financials Lead off Earnings Season with Mixed Results

CPI comes in softer than expected
David Becker

US stocks were mixed on Tuesday as traders took profits on some of the large-cap technology shares after a huge runup. JP Morgan and Citibank kicked off the earnings season, knocking the cover off the ball. A surge in revenues on fixed income trading desks were the catalyst that helps these bank beat on revenue and earnings. Wells Fargo, reported softer than expected earnings, dropping 5% on Tuesday after missing on the top and bottom lines. Sectors in the S&P 500 index were mixed, driven higher by Healthcare, Real-estate was the worst performer. US CPI came in slightly lower than expected, which weighs slightly on the dollar.

J.P Morgan Chase Beats on the Top and Bottom Line

J.P. Morgan Chase posted earnings and revenue that beat expectations driven by strong rebound in trading revenue at the end of 2019. The financial powerhouse reported that Q4 profit rose 21% to $8.52 billion, or $2.57 a share, compared with the $2.35 estimate. Managed revenue climbed 9% to $29.2 billion, compared with the $27.94 billion estimates.

Profit in the investment bank climbed 48% to $2.9 billion, mainly on trading results. Bond trading revenue surged 86% to $3.4 billion, exceeding the $2.61 billion estimate by roughly $800 million, as fixed-income desks cashed in. Stock traders posted a 15% increase in revenue to $1.5 billion, compared with the $1.37 billion estimates.

CPI Rose Edges Higher but Misses Expectations

The Labor Department reported that CPI Rose 0.2% in December month over month after climbing 0.3% in November. Expectation was for US CPI to rise by 0.3% month over month. The monthly increase in the CPI has been slowing since jumping 0.4% in October. December CPI rose 2.3%, year over year which was in line with expectations. That was the largest increase since October 2018 and followed a 2.1% gain year-on-year in November.

The CPI accelerated by 2.3% in 2019, the largest rise since 2011, after increasing 1.9% in 2018. Excluding food and energy CPI edged up 0.1% after climbing 0.2% in November. The core CPI was up by 0.11% last month compared to 0.23% in November. On a year over year basis, through December, the core CPI increased 2.3%, the largest gain since October 2018, after rising 2.3% in November.

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