US OPEN: Wall Street lower after disappointing data

• US indices trading lower at the opening
• Pandemic hits the banking sector's profits
• Citigroup’s (C.US) and Goldman’s (GS.US) first-quarter profits slumped 46%

 

US Indices  opened lower after recent data suggesting that the impact of coronavirus on the US economy may be more serious than previously thought. Last month, retail sales dropped to a record level of 8.7%, and industrial production fell by 5.4%, the most in 74 years, with both figures being much worse than expected. 

 

Today Sen. Elizabeth Warren endorsed Joe Biden for president. Former President Barack Obama and Sen. Bernie Sanders already backed Biden this week.

S & P500 (US500) erased yesterday gains and is trending lower today. Should downbeat moods prevail, resistance at 2648.00 pts  may come into play. Source: xStation5

The most important companies continue to report results for the first quarter of this year. Bank of America (BAC.US), a financial giant, reported that its revenues in the first quarter of 2020 amounted to $22.8 billion , which means a 1% decrease compared to the same period a year ago. Earnings per share decreased by 43% y / y to $0.40 , and net profit decreased by 45% to $4 billion. Company reported net interest income: at $12.3 billion. Bank added $3.6 billion to loan loss reserves in the quarter. Analysts expected earnings per share of 46 cents on revenue of $ 22.9 billion. Net interest income was expected to come in at $ 11.7 billion.

 

Goldman Sachs (GS.US) shares slumped 3.3% in premarket trading after company reported that profits in the first quarter fell by 46%, due to poor results of its asset management division caused by the coronavirus epidemic. However trading division performed  better than expected, helping companywide revenue of $8.74 billion which came above expectations of  $7.92 billion. The company reported quaterly earnings of $1.21 billion, or $3.11 a share, below estimates of  $3.35. “While Goldman Sachs’ profits were cut in half, most of its lines of business actually did quite well,” said Octavio Marenzi, CEO of capital markets consultancy Opimas. “Revenues increased in investment banking, global markets and consumer and wealth management. However, the bank took a bath in asset management.”
In this quarter, Goldman allocated $937 million for loan losses, as the company has a smaller book of loans compared to other banks and cited higher provisions for corporate loans in the flailing energy sector.

US Bancorp (USB.US) announced first quarter earnings that missed forecasts and revenue that came above expectations. US Bancorp announced earnings per share of $ 0.72 on revenue of $ 5.77B. Analysts expected EPS of $ 0.82 on revenue of $ 5.57B. That with comparison to EPS of $ 1 on revenue of $ 5.58B in the same period a year before. US Bancorp had reported EPS of $ 0.9 on revenue of $ 5.67B in the previous quarter. Analysts are expecting EPS of $ 0.85 and revenue of $ 5.69B in the next quarter. Company shares are down 39.62% from January.

Citigroup’s (C.US) also released first-quarter earnings report. Earnings: $1.05 per share vs $1.87 per share in the year-earlier period. Revenue: $20.7 billion, up 12% from the previous year Net income: $2.52 billion, down 46% from the prior year as company sets aside more money for loan losses Loan loss reserves: up $4.9 billion Citigroup announced that  revenue was 12% higher thanks to  higher fixed income and equity markets trading revenue.  Citigroup shares fell nearly 3% in the premarket. Analysts anticipated earnings per share of $1.04 on revenue of $19 billion. “Our earnings for the first quarter were significantly impacted by the COVID-19 pandemic,” CEO Michael Corbat said in a statement. “The deteriorating economic outlook and the transition to the new Current Expected Credit Loss standard (CECL) caused us to build significant loan loss reserves.” Citigroup shares have tumbled more than 43% since the beginning of the year.

Citigroup (C.US)  share price trades in a range between $ 34.09 and $ 48.94. Only breaking out of this zone can lead to more rapid price movements. Source: xStation5

 

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