US third-quarter earnings season has got off to a solid start with Delta Airlines and megabanks, JPMorgan, Citigroup, and Wells Fargo all reporting solid quarterly profits in the first week of the third quarter reporting season.
This week 54 companies in the S&P 500 are due to report results. They include UnitedHealth, Johnson & Johnson, CSX, Alcoa, Nucor, Abbott Labs, Textron, Honeywell, Netflix, IBM, Bank of America, Morgan Stanley, Goldman Sachs, American Express (Amex), Schlumberger and United Continental.
(Two of Warren Buffett’s pillar stocks in Amex and Bank of America and a former pillar in the shape of IBM, but now abandoned).
JPMorgan, America’s biggest bank by assets, reported a 24% in net income for the third quarter versus a year earlier, Wells Fargo reported a 33% in the third quarter net profit as cost cutting paid off, while Citi revealed a 12% rise in net income. Lower tax rates played a significant part in the growth in net income at all three big banks.
The S&P500’s financial sector ended the day up 0.1 on Friday and the S&P 500 banks subsector closed down 0.4%, well above its session low.
The biggest drag on the sector was JPMorgan Chase & Co, which closed down 1% despite reporting a quarterly profit that beat expectations.
The regional bank, PNC Financial saw 5.6% drop after it reported disappointing quarterly loan growth and said it expected only a small improvement in lending this quarter.
Citigroup rose 2%, and Wells Fargo was up 1.3% after its solid results.
Wednesday morning, Sydney time is looking like a vital time for the US earnings season and global stock markets. That’s when Netflix reports its third-quarter results.
It had weak second-quarter figures on subscriptions growth. Analysts are wondering if that will reoccur in this week’s report.
Netflix shares jumped 5.7% on Friday to be only down 3.3% last week (which was a little bit better than the fall in the market indices. That left it down 6% for the month and 14% in the past three months.
And if the market instability continues then watch for companies to continue buybacks. They were up 48% in the first half of the year as companies used their tax cuts and offshore cash to pay more to shareholders and insiders.
According to Goldman Sachs, they estimate buybacks will rise 44% in 2018 from the previous year to $US770 billion.
