Stocks Muted After Mixed Big Bank Earnings, Falling Wholesale Prices

Equity Indexes Wrap: Airlines Tumble on Delta’s Lowered Guidance; Big Banks Diverge After Earnings Misses

46 minutes ago

The Dow

Verizon (VZ) rose 1.7%, regaining some of the ground it lost yesterday when it and competitor AT&T’s executives were called on to meet with federal officials over their use of lead-sheathed phone cables.

Chevron (CVX) added 1.4% as oil prices edged higher amid escalated tensions in the Red Sea. 

Microsoft (MSFT) rose 1%, bringing it closer to overtaking Apple (AAPL) as the most valuable U.S. company. Apple shares inched up just 0.2% after an appeals court upheld a patent tribunal decision favoring Masimo in a dispute over blood oxygen sensors in Apple Watches. 

UnitedHealth Group (UNH) fell 3.3% after a 16% increase in medical costs in the fourth quarter overshadowed its earnings beat. 

Boeing (BA) lost 2.2% amid reports it was being sued by Alaska Air passengers who were aboard the 737 Max 9 jet that lost part of its fuselage mid-flight last week.

JPMorgan Chase (JPM) fell 0.7% after its net income and revenue came in below expectations following a $2.9 billion special assessment from the FDIC.

The S&P 500

Bank of New York Mellon (BK) rose 4% after its quarterly earnings topped analyst estimates. 

Defense companies outperformed as tensions ratcheted up in the Red Sea following U.S. airstrikes on Houthi military installations in Yemen. Northrop Grumman (NOC) rose 3%, L3 Harris Technologies (LHX) climbed 2.4%, and Lockheed Martin (LMT) added 2.2%.

Citigroup (C) rose 1% after it said quarterly earnings took a hit from an FDIC assessment and restructuring costs. 

BlackRock (BLK) shares rose 0.9% after the firm reported better-than-expected earnings and announced its $12.5 billion acquisition of Global Infrastructure Partners.

Airline and cruise stocks tumbled after Delta Airlines (DAL) overshadowed its earnings beat with lowered full-year earnings guidance. United Airlines (UAL) lost 10.6%, while American Airlines (AAL) and Delta lost 9.5% and 9%, respectively. Norwegian Cruise Line Holdings (NCLH) also sank amid Delta’s guidance revision and rising oil prices. It fell 4.3%, and peer Carnival Corp (CCL) lost 3.3%. 

UnitedHealth’s earnings report sent health insurance stocks lower, including Humana (HUM), down 3.6%, and CVS Health (CVS), down 3%.

Bank of America (BAC) fell 1.1% after it reported earnings were, like the other big backs, hit by an FDIC regulatory charge in the fourth quarter. 

The Nasdaq 100

MercadoLibre (MELI) led the index, gaining 4.2%. 

Coca-Cola Europacific Partners (CCEP) rose 2.6% after BNP Paribus upgraded the stock to “outperform” from “neutral.”

Regeneron (REGN) gained 1.9% after RBC upgraded the stock to “outperform” following its win over Viatris in a patent dispute related to its best-selling eye drug Eylea.

Tesla (TSLA) tumbled 3.7% after it said it would pause production at its largest European factory for two weeks after conflict in the Red Sea disrupted its supply chain.

BNY Mellon Leads S&P 500 Thanks to Higher Interest Rates

1 hr 23 min ago

Bank of New York Mellon Corp. (BK) was the best-performing stock in the S&P 500 Friday afternoon as the bank posted better-than-expected results because of surging net interest revenue.

BNY Mellon reported fourth-quarter 2024 diluted earnings per share (EPS) of 33 cents, down 47% compared to the same period the year before. But the bank took some big charges in the quarter. Adjusted EPS, which excludes the impact of those expenses, was $1.28. Revenue advanced 10% to $4.31 billion. Both exceeded analysts’ forecasts.

Those adjustments include $752 million in expenses related to a special assessment from government regulators after the collapse of Silicon Valley and Signature banks, severance, and litigation reserves.

Net interest revenue was up 4% to $1.10 billion. Assets under management (AUM) rose 8% to $2 trillion, benefiting from both client inflows and a stock market rally toward the end of 2023. 

BNY Mellon shares were up 4% late in the session Friday to trade at their highest level since last February.

-Bill McColl

Delta Cuts Its 2024 Profit Forecast on Economic, Supply-Chain Concerns

2 hr 12 min ago

Delta Air Lines Inc. (DAL) shares plummeted Friday after the air carrier lowered its 2024 earnings guidance on concerns about the economy and its supply chain. The stock price was also affected by a jump in oil prices as Middle East tensions increased.

Delta said it now anticipates 2024 earnings per share (EPS) of $6 to $7, down from its earlier guidance of more than $7. It made $6.25 a share last year.

The warning came as Delta posted fourth-quarter fiscal 2023 profit and sales that exceeded forecasts thanks to a continued surge in post-pandemic travel demand. The company reported EPS of $1.28, with revenue up 11% to $13.66 billion. Both were above analysts’ estimates.

Delta’s guidance hit other airline stocks as hard as it hit its own. United Airlines (UAL) was down more than 10% Friday afternoon, while American Airlines (AAL) lost more than 8% and Southwest Airlines (LUV) dropped more than 4%.

-Bill McColl

UnitedHealth Weighs on Dow, Health Insurance Stocks

2 hr 54 min ago

UnitedHealth Group (UNH) was the worst-performing stock in the Dow Jones Industrial Average Friday after it reported a 16% increase in medical costs in the fourth quarter. 

Soaring costs from medical claims overshadowed an otherwise positive earnings report. Revenue grew 15% to $94.4 billion, while net income climbed nearly 16% to $5.68 billion. Both exceeded Wall Street’s forecasts.

Rising healthcare costs this year have outpaced UnitedHealth’s revenue from premiums, which are often set for a full year and require approval from regulators to be raised. UnitedHealth’s costs climbed to $62.23 billion in the quarter, contributing to a medical care ratio of 85%. That exceeded the full-year ratio of 83.2%, which itself was more than last year’s ratio of 82%.

UnitedHealth’s results raised concerns among investors about other insurance companies, sparking an industry-wide sell-off. UnitedHealth shares fell 3.5% Friday, while competitors Humana (HUM) and Aetna-owner CVS Health (CVS) fell 3.3% and 2.4%, respectively. Elevance Health (ELV) shares fell 1.8%.

Wells Fargo Slides After Warning Interest Income Likely To Contract in 2024

3 hr 55 min ago

Shares of Wells Fargo & Co. (WFC) were down almost 4% Friday after the bank warned interest income could fall significantly in 2024 as borrowing costs decline.

The company anticipates net interest income will be 7% to 9% lower than in 2023 on expectations the Federal Reserve will cut rates as inflation eases.

For its 2023 fourth quarter, the company reported net income of $3.45 billion, or 86 cents per share. Excluding one-time items, earnings were $1.26 per share, more than forecasts, according to London Stock Exchange Group estimates.

Despite Friday’s midday loss, shares of Wells Fargo remain almost 15% higher over the past year. 

-Bill McColl

Bitcoin Slumps, Giving Up ETF Approval Gains

4 hr 41 min ago

The price of Bitcoin plummeted to less than $44,000 Friday, putting the world’s most valuable cryptocurrency about where it was at the start of the week before it surged in the days leading up to yesterday’s debut of several spot Bitcoin ETFs. 

More than $4.6 billion worth of Bitcoin ETF shares changed hands yesterday, with Grayscale’s Bitcoin Trust (GBTC) accounting for more than half of the activity. BlackRock and Fidelity’s offerings saw $1 billion and $700 million worth of transactions, respectively. 

However, not everyone who wants to buy in can. Some brokerages—Vanguard, for example—have chosen to not offer Bitcoin ETF trading.

“Our perspective is that these products do not align with our offer focused on asset classes such as equities, bonds, and cash, which Vanguard views as the building blocks of a well-balanced, long-term investment portfolio,” the brokerage told Investopedia.

Meanwhile, Ethereum, the second largest cryptocurrency by market cap, briefly rose above $2,700 Friday morning after BlackRock CEO Larry Fink told CNBC he “sees value” in an ether ETF. That is considered by some to be the next big hurdle for crypto in its push to gain mainstream acceptance. 

Tesla Shares Sink as Red Sea Fighting Forces Production Pause in Germany

5 hr 34 min ago

Shares of Tesla (TSLA) fell more than 2% after the electric vehicle maker said it would pause production at its largest European factory for two weeks because of shipping delays caused by unrest in the Middle East.

The company plans to halt production at its Gigafactory Berlin-Brandenburg between Jan. 29 and Feb. 12 after parts deliveries were delayed by attacks on Red Sea shipping lanes by Yemen-based Houthi militants. 

The pause amplifies concerns that Israel’s war in Gaza and military responses by its Middle East neighbors could spark a European supply-chain crisis.

Iran-backed Houthis began attacking commercial ships in the Red Sea late last year, leading major shipping companies to reroute Europe-bound traffic around Africa. The U.S. and a coalition of allies have responded by intercepting Houthi drones and missiles and bombing military installations in Yemen.

JPMorgan Shares Rise on Q4 Earnings Beat

6 hr 9 min ago

JPMorgan Chase & Co.’s (JPM) shares rose Friday morning after reporting record net interest income in the fourth quarter, taking the edge off an earnings miss due to an FDIC special assessment.

JPMorgan earnings by the numbers:

• Net revenue: $39.9 billion vs. $40.39 billion expected, according to analyst estimates compiled by Visible Alpha
• Earnings per share: $3.04 vs. $3.43 expected
• Net income: $9.3 billion vs. $10.64 billion expected

A $2.9 billion special assessment from the Federal Deposit Insurance Corporation (FDIC) shaved 74 cents per share from the bank’s profit.

The bank’s net interest income (NII) got a boost from the Federal Reserve’s anti-inflation interest rate hike campaign. In the fourth quarter, JPMorgan posted NII of $24.1 billion, up 19% compared to the year-ago period and above the $22.98 billion analysts expected.

-Mrinalini Krishna

UnitedHealth Shares Tumble on Rising Medical Costs

6 hr 45 min ago

UnitedHealth Group’s (UNH) shares dropped roughly 3% in early trading despite reporting better-than-expected revenue and profit in the fourth quarter as higher-than-expected claims costs spooked investors.

UnitedHealth earnings by the numbers:

• Revenue: $94.4 billion vs. $92.1 billion expected, according to analyst estimates compiled by Visible Alpha
• Adjusted earnings per share: $6.16 vs. $5.78 expected

Medical loss ratio, or the percentage of premiums the company pays out to cover claims, is a key indicator of profitability for a company like UnitedHealth. The higher the medical loss ratio, the less room the company has to make a profit.

In the fourth quarter, the company’s medical loss ratio increased to 85%, higher than analysts expected.

-Mrinalini Krishna

Stocks Making the Biggest Moves Premarket

7 hr 45 min ago

Gains:

• Oil tankers: Shares of oil shipping companies and oil futures jumped after the U.S. led airstrikes against Yemen-based Houthi militants who have been targeting shipping lanes in the Red Sea for weeks in protest of Israel’s bombardment of Gaza.
• JPMorgan Chase (JPM): The bank’s shares rose about 2% after its quarterly earnings topped estimates as it reported a seventh consecutive quarter of record net interest income. 
• Citigroup (C): Shares of the bank also rose 1.5% after reporting a net loss of $1.8 billion due to several one-time charges. CEO Jane Fraser expressed confidence that her restructuring plan will make 2024 a turning point for the bank.

Losses:

• Delta Airlines (DAL): Shares fell more than 5% after the company’s fourth-quarter earnings beat analyst estimates but its full-year profit forecast fell short of prior guidance. 
• UnitedHealth Group (UNH): Shares fell more than 4% after the health insurer said medical costs jumped 16% year-over-year in the fourth quarter. 
• Tesla Inc. (TSLA): Shares slid about 3% after the EV maker said it would pause production at its Berlin factory for two weeks as attacks on shipping in the Red Sea have delayed parts shipments. 

Stock Futures Dip Ahead of PPI

8 hr 41 min ago

Futures contracts connected to the Dow Jones Industrial Average were down about 0.4% in early trading Friday.

S&P 500 futures were off about 0.3%.

Nasdaq 100 futures also slipped 0.3%.