The main indexes on the New York Stock Exchange ended today’s trading session into the red after the US President Donald Trump shared his doubts about progress in trade talks with China. Trump said that there is a “long way” that Washington and Beijing had to go through before reaching a deal. The US President threatens to reintroduce customs duties on the remaining Chinese imports worth 325 billion USD.
The blue-chip index Dow Jones Industrial Average declined by 0.95% to 27,358.21 points. The broader S&P 500 was down 0.27% to 3,006.28 points, while the technology Nasdaq Composite wiped out 0.35% to 8,229.67 points.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 1.42% to 12.86.
Industrial production in the United States accelerated in June, booming for a second consecutive month, thanks to growth in automotive parts. The US Federal Reserve said today that industrial output rose by 0.4%, supported by 1.9% growth in automotive parts.
On the other hand, retail sales in the US rose by 0.4% MoM in June. The increase last month was above the forecast by economists for a slight gain of 0.1%.
Investors have focused their attention on the reporting season that began this week. Earlier today, US financial giants Goldman Sachs Group and JPMorgan Chase announced better-than-expected earnings for the quarter.
While all four banks were able to surpass much-lowered expectations for second-quarter performance, the broad theme we’re seeing is slowing loan growth, somewhat muted trading revenues, and shrinking margins. Lower manufacturing activity, lower housing activity, and business-investment slowing are all manifesting themselves in bank performance.
On the bond markets, the yields on 10-year and 30-year US Treasuries rose to 2.118% and 2.627%, respectively.
Corporate stocks performance
Johnson & Johnson was in focus after the health-care retailer produced quarterly results that were better than expected while boosting its full-year outlook, though it reported falling revenue compared with the second quarter of last year. Shares of Johnson & Johnson declined by 1.6%.
The stocks of Domino’s Pizza fell by 8.7% after the fast-food retailer reported second-quarter revenue and same-store sales growth that fell short of analyst estimates.
The stocks of the banking giants Goldman Sachs Group and JPMorgan Chase added 1.9% and 1.1%, respectively, after delivering better-than-expected earnings.
Facebook was in the focus after executives from the social-media giant were treated to a blistering reception while explaining its digital currency venture Libra coin to a Senate banking committee on Tuesday. Facebook’s stock was unchanged.
The stocks of Blue Apron Holdings rose by 35.6% after the meal-kit company announced seasonal recipes that will include plant-based proteins from Beyond Meat Inc.
The top performers on the S&P 500 were JB Hunt Transport Services Inc (+5.56%), The Charles Schwab Corporation (+3.30%) and Whirlpool Corporation (+3.27%), while on the flipside were Range Resources Corp (-7.07%), Western Digital Corporation (-5.76%) and NRG Energy Inc (-4.38%).
Corporate earnings reports
J.P. Morgan Chase reported earnings that exceeded analysts’ expectations, aided by an income tax benefit that boosted results by 768 million USD. The bank posted a record second-quarter profit of 9.65 billion USD, 16% higher than a year earlier, or 2.82 USD per share, beating the 2.50 USD estimate of analysts. The revenue of 29.57 billion USD was 4% higher than a year earlier and edged out expectations of 28.9 billion USD. J.P. Morgan said that the presumably one-time tax boost came from the resolution of “certain tax audits” that lifted the company’s per-share earnings by 23 cents. The bank cut its forecast for 2019 net interest income — a main driver of bank profits — by 500 million USD to 57.5 billion USD, compared with the 58 billion USD target in the previous quarter’s presentation.
Wells Fargo beat profit forecasts as investors punished lower net interest income than hoped and comments from management that expenses could remain on the higher end of projections into 2020. The bank said its net income was 6.2 billion USD in the second quarter, up from 5.9 billion USD in the first quarter and 5.2 billion USD in the year-earlier period. However, net interest income came in just shy of estimates at 12.1 billion USD. The net interest margin fell by 9 basis points from the prior quarter to 2.82% thanks to higher deposit costs and a “lower interest rate environment”.
The bank reported earnings of 1.30 USD per share on revenues of 21.58 billion USD.
Goldman Sachs posted second-quarter earnings that beat Wall Street’s expectations, as a surge in investment and lending activity lifted its performance during Q2 and sent its stock higher in Tuesday’s trading. The third major bank to report earnings this week, Goldman reported a quarterly profit of 5.81 USD per share on 9.46 billion USD of revenue, compared to the comparable year-ago quarter of 5.98 USD on 9.40 billion USD in revenue. Analysts on average expected the investment banking giant to report an adjusted Q2 profit of 4.93 USD per share (5.10 USD on a GAAP basis) on revenue of 8.8 billion USD.
Johnson & Johnson posted stronger-than-expected second-quarter earnings Tuesday and boosted its full-year sales outlook as international pharmaceutical revenues offset a domestic pullback. Johnson & Johnson said adjusted diluted earnings for the three months ending in June came in at 2.58 USD per share, up 22.8% from the same period last year and firmly ahead of the Street consensus of 2.44 USD per share. Reported group revenues, Johnson & Johnson said, fell 1.3% to 20.56 billion USD but again beat analysts’ forecasts of a 20.39 billion USD tally.