Bank of America shares rise after posting higher-than-expected profit on retail operations

Bank of America beat analysts’ estimates for profit and revenue as the firm’s consumer and banking businesses offset a slump in trading.

The firm said net income excluding an impairment charge rose 4% to $7.5 billion, or an adjusted 75 cents a share. When including the $2.1 billion charge tied to the end of a partnership with First Data, net income fell to 56 cents a share, exceeding the 51 cent estimate of analysts surveyed by Refinitiv. Shares of the bank rose 1.9% in early trading.


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Revenue was almost unchanged from a year earlier at $23 billion, edging out the $22.79 billion estimate.

Bank of America, the second-biggest U.S. lender after J.P. Morgan Chase, is the “most asset sensitive” among the big banks, meaning that changes in interest rates impact it the most, according to Morgan Stanley analyst Betsy Graseck.

Bank of America CEO Brian Moynihan is likely to lower guidance for the net interest income it earns after the Federal Reserve cut rates twice in the quarter. The firm has already done that twice this year, in April and July, and each time the bank’s shares traded lower off the news.

Under Moynihan, the firm has steadily trimmed expenses while holding the line on or increasing revenue. (The bank has said that its expenses would total $53 billion for 2019.) That has made it a favorite holding of Warren Buffett’s Berkshire Hathaway, which has asked the Fed for permission to take his stake beyond the 10% level, according to Bloomberg.

The bank’s shares have climbed 21% this year before Wednesday’s earnings report, exceeding the 18% return of the KBW Bank Index.

Here’s what Wall Street expected:
Earnings: 51 cents a share, down 23% from a year earlier, according to Refinitiv.
Revenue: $22.79 billion, down 0.6% from a year earlier.
Net Interest Margin: 2.39%, according to FactSet
Trading Revenue: Fixed income $2.04 billion, Equities $1.09 billion

Source: cnbc.com | Original Link

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US futures point to slightly lower open

U.S. stock index futures were slightly lower Wednesday morning.

At around 05:40 a.m. ET, Dow futures dipped 91 points, indicating a negative open of more than 64 points. Futures on the S&P and Nasdaq were both marginally lower.

The pre-market moves come as investors closely monitor Brexit developments. Officials and diplomats said that differences over the terms of the U.K.’s split from the European Union had narrowed significantly on Tuesday.

It has raised hopes that a deal can be agreed by leaders at a key summit on Thursday. Sterling initially jumped above $1.28 on the news, a level not seen since late May, before paring gains as uncertainties remained.

A crucial two-day summit of EU leaders begins in Brussels on Thursday. It is the last such meeting currently scheduled before the fast-approaching Brexit deadline.

The world’s fifth-largest economy is due to leave the EU on October 31 and Prime Minister Boris Johnson has repeatedly insisted he will not request another delay.

Elsewhere, China’s Foreign Ministry said Wednesday that it would take countermeasures against the U.S. in response to a bill that favors Hong Kong protesters.

It comes less than 24 hours after the U.S. House of Representatives passed a bill that requests various government departments to consider whether political developments in Hong Kong require the U.S. to change the region’s special trading status.


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Data, earnings

On the data front, retail sales for September and a business leaders survey for October will be released at around 8:30 a.m. ET. Business inventories for August and the latest monthly survey from the National Association of Home Builders (NAHB) will follow slightly later in the session.

In corporate news, Abbott Labs, Bank of America and U.S. Bancorp are among the major companies scheduled to report earnings before the opening bell.

IBM, Netflix and CSX are among those expected to report their latest quarterly figures after market close.

Source: cnbc.com | Original Link

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US futures point to a higher open on strong start to earnings season

U.S. stock index futures were higher Tuesday morning, after a number of major companies posted big earnings beats.

Around 7 a.m. ET, Dow futures indicated a positive open of more than 120 points. Futures on the S&P and Nasdaq were both also higher.


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Earnings season kicked off with stronger-than-expected results from J.P. Morgan Chase, Johnson & Johnson, UnitedHealth, and BlackRock, sending shares higher in the premarket.

Citigroup, Goldman Sachs, and Wells Fargo are also set to release their latest performance numbers before the bell, while United Airlines and Interactive Brokers will release earnings after the bell.

Meanwhile, market players are monitoring developments on the trade front. U.S. Treasury Secretary Steven Mnuchin told CNBC that tariffs will go up in December if there is no deal in place with China.

“I have every expectation if there’s not a deal those tariffs would go in place, but I expect we’ll have a deal,” Mnuchin said Monday.

Furthermore, the U.S. has also decided to stop trade negotiations with Turkey and raised its steel prices to 50%. The decision followed an earlier U.S. announcement to remove all U.S. troops from the northern border of Syria with Turkey.

On the data front, the New York Empire State manufacturing figures are due to be released at 8:30 a.m. ET.

Source: cnbc.com | Original Link

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