Markets slip as earnings season picks up steam

Dow pulled back 106, advancers over decliners better than 3-2 & NAZ was off 117.  The MLP index fell 2 to the 287s & the REIT index soared 7+ to the 435s.  Junk bond funds inched higher & Treasuries were purchased which brought lower yields.  Oil dropped 3+ to 70 & gold bounced back 8 to 2674.

Dow Jones Industrials

Citigroup reported 3rd-qtr results that topped expectations, with growth in investment banking & wealth management.  However, the bank set aside more money to offset potential loan losses.  Its banking division reported an 18% increase in revenue year over year, led by a 31% gain in its investment banking arm & wealth revenue rose 9%.  EPS fell to $1.51 from $1.63 a year earlier.  Earnings were hurt by a higher cost of credit, including a net build of $315M in Citi's allowance for credit losses.  Revenue rose 1% to $20.3B from $20.1B a year ago.  On the markets side, equity markets revenue rose 32% year over year, but fixed income revenue dipped 6%.  CEO Jane Fraser took over in Mar 2021 & has focused on slimming down the bank during her tenure.  That includes reducing Citi's global presence & laying off workers.  Investors will be looking for updates on her turnaround plan later today.  “This quarter contains multiple proof points that we are moving in the right direction and that our strategy is gaining traction, including positive operating leverage for each of our businesses, share gains and fee growth,” Fraser said.  The stock fell 67¢.

Citigroup earnings top estimates, boosted by investment banking

Goldman Sachs (GS), a Dow stock, topped estimates for 3rd-qtr profit & revenue on strong results from its stock trading & investment banking operations.  Profit surged 45% from a year earlier to $2.99B ($8.40 per share) as revenue climbed 7% to $12.7.  CEO David Solomon cited an “improving operating environment” as he touted his firm's results.  Equities trading was the outlier this qtr, posting an 18% revenue increase to $3.5B, more than ½ a billion $s higher than the $2.96B estimate.  Fixed income trading revenue slipped 12% from a year earlier to $2.96B, just above the $2.91B estimate, on a slowdown in interest rate products & commodities.  Investment banking revenue jumped 20% to $1.87B, topping the $1.62B estimate, on strength in debt & equity underwriting, & the bank said its backlog for pending deals increased from both a year earlier & the 2nd qtr.  The asset & wealth management division also helped it top expectations; revenue there jumped 16% to $3.75B, exceeding the $3.58B estimate.  The stock rose 2.06.

Goldman Sachs beats on profit and revenue as stock trading and investment banking boost results

Bank of America (BAC) topped estimates for 3rd-qtr profit & revenue on better-than-expected trading results.  Net income fell 12% from a year earlier to $6.9B (81¢ a share) on higher provisions for loan losses& rising expenses.  Revenue rose less than 1% to $25.5B as gains in trading revenue, asset management & investment banking fees offset a decline in net interest income.  CEO Brian Moynihan since 2010, demonstrated the advantages of having a massive & diversified financial institution.  Analysts have focused on the bank's core activity of taking in deposits & lending to consumers & corps as rising rates have squeezed the firm's haul from interest income.  But the qtr showed that the bank also benefits from surging activity thru its trading & advisory operations.  Fixed income trading revenue rose 8% to $2.9B, topping the $2.74B estimate, on strength in currencies & interest rate activity.  Equities trading jumped 18% to $2B, topping the $1.81B estimate, on higher cash & derivative volumes.  Investment banking fees also surged 18% to $1.4B, topping the $1.27B.  While net interest income (NII) fell 2.9% from a year earlier to $14.1B, that edged out the $14.06B estimate.  That NII figure in the 3rd qtr was higher than in the 2nd qtr, a sign that NII the trajectory for this key metric is improving.  The lender said in Jul that a rebound in NII was coming in the 2nd ½ of the year.  The stock rose 76¢.

Bank of America tops estimates on better-than-expected trading revenue

Investors assessed a fresh crop of bank earnings.  As the rush of earnings starts to broaden out, hopes are for further positive surprises in what some suspect could be a tricky season.  Also, energy stocks tumbled on a report that Israel is prepared to refrain from bombarding Iran's crude & nuclear facilities in its response to an attack 2 weeks ago.