In a week marked by the start of the earnings season, the stock boards unveiled a mixed bag of performances across key sectors of financials, industrials, and consumer staples. While most of the market is focused on artificial intelligence and technology, the resiliency of the U.S. economy this year is evident given the performance of the financial sector.
Among the eight S&P 500 (SP500) companies that reported results this week, 75% reported profit above analyst expectations, while the rest of the 25% missed consensus. Five of the companies reported a revenue beat, while the rest reported a topline miss.
Wall Street closed higher by the end of the week, rising by about 1.24%. Of the three S&P sectors that reported results, the financial sector holds the highest amount of weightage in the S&P 500 with 12.6%.
With inflation falling during the month of June, investors were hopeful about a rate reduction after the Labor Department’s monthly release with the consumer price index. At the industry level, financials, consumer staples, and industrials were expected to benefit from the potential rate cut.
A look at finance
Financial heavyweights like JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C), and Bank of New York Mellon (BK), all delivered a beat on topline estimates by Friday.
While shares of Citigroup (C) and Bank of New York Mellon (BK) rose after their respective results announcements in premarket trading, JPM fell marginally by about 0.9% as the U.S.’s largest bank by assets increased its provision for credit losses. The company kept its full year net interest income guidance of about $91 billion unchanged, compared with Visible Alpha consensus of $91 billion. JPM also saw an improvement in its investment banking fees, as market revenue improved.
Citigroup (C) stock rose in premarket trading by 2.9% upon topping Wall Street expectations. The bank also announced a $1 billion stock buyback, while also maintaining its full year revenue guidance. The bank also reported a higher services revenue and a decline in expenses during the quarter.
Bank of New York Mellon (BK) stock also rose on Friday premarket trading after it posted second quarter earnings that beat Wall Street estimates. The bank also reported a decline in expenses, which allowed for a higher net interest income.
Wells Fargo shares dipped considerably, by about 5.7% in premarket trading on Friday, after the San Francisco-based bank maintained its guidance for its 2024 net interest income. The bank also raised its guidance for non interest expenses.
Delving into industrials
On Thursday, Delta Air Lines (DAL) delivered a miss on topline and bottom-line estimates. The Atlanta-based carrier’s shares were down about 8.6% in premarket trading on Thursday, pulling down the airline sector, aided by United Airline (UAL) slipping by 3.9%, American Airlines Group down by 4.1%.
During a media appearance, the CEO of the airline said that the lower fare discounting was impacting the company.
On the other hand, Fastenal (FAST) stock rose about 2.7% on Friday after the company declared results. Often seen as an indicator of the industrial economy’s health, the company reported a beat on topline estimates.
A glance at consumer staples
In the consumer sector, both companies, Conagra Brands (CAG) and Pepsico (PEP) reported a beat on profits, however fell short against revenue.
Packaged foods company Conagra Brands (CAG) shares dipped down as much as 4.7% on Thursday after the company reported fiscal 2025 profit guidance below Wall Street estimates. The company said that it expects the cost of goods sold inflation to continue into next year.
Pepsico (PEP) shares fell 2.4% in premarket trading on Thursday after posting a mixed quarterly report. The CEO of the beverage giant said that the business delivered net revenue growth and EPS growth during the quarter and had been affected by subdued category performance within North America convenient foods and the impact associated with certain product recalls at Quaker Foods North America.
For the upcoming week, about 78 S&P 500 names are scheduled to report results, with the likes of BlackRock (BLK) and Goldman Sachs (GS) on Monday. Tuesday is expected to see Bank of America (BAC), Morgan Stanley (MS), UnitedHealth (UNH). Johnson & Johnson (JNJ), Kinder Morgan (KMI), and United Airlines (UAL) are also expected to report earnings on Wednesday.
Thursday would see Netflix (NFLX) and Abbott Laboratories (ABT) put out their results. American Express (AXP) would post its earnings on Friday.