Mixed response to early US earnings reports
SPY•US stocks were modestly lower as investors reacted to early third-quarter results from major banks. Citigroup fell nearly 4% despite beating profit estimates; analysts expected S&P 500 earnings to rise 30.6% year over year and revenue to increase 11.8%.
1. Bank shares diverge
JPMorgan, Goldman Sachs and other major banks reported third-quarter results, with shares of the banks that had reported moving in mixed directions. Citigroup fell nearly 4% despite beating Wall Street estimates for profit, while all three major US indexes were modestly lower in afternoon trading.
2. Earnings expectations
Analysts expected S&P 500 companies to increase third-quarter earnings 30.6% from a year earlier and revenue 11.8%. Financial-sector earnings were expected to rise 4.9%, while technology earnings were projected to grow 66.5%, communication services 47.8% and energy 123%.
3. Investor focus
BofA Securities strategists said healthy earnings beats may not be enough to drive stocks higher after large positive surprises in the previous two quarters. They said investor focus would largely be on growth related to artificial intelligence.
