Here is what you need to know on Friday, January 14:
Bank stocks just went boom and not in a good way. As predicted by us in our large preview note here, we saw earnings coming in ahead of estimates but the stock prices falling back on those earnings.
Why? First, the beat was priced in. Look at the performance so far of financials for the year. It is better to travel than arrive. Second, some nice reserve releases are adding to the boost in bank profits. However, it is not all doom and gloom for banks. The Fed was increasingly hawkish yesterday in its commentary, something that should serve to underpin financial stocks this year. Indeed, this sell off may present a nice entry opportunity. We remain overweight financials for the year relative to other sectors. Goldman Sachs (GS) is up on Monday, and we can usually expect the master of the universe to deliver.
Markets are fearful though with the Nasdaq taking a pounding yesterday on no news. Many are saying the Fed has turned increasingly hawkish, but fed funds futures were already pricing in near 90% certainty of a March hike before equities sold off on Thursday. The retail sales number just out is not going to help sentiment as the number misses by quite a leap: -1.9% monthly versus -0.1% forecast.
The dollar is where the big money is at, and this had already signaled that risk was off (the real reason for the equity slide) as it slumped in the second half of the week to 1.1450 now versus the euro. Equity markets have been propelled to current heights by risk assets, the likes of Tesla (TSLA), etc. When the rally has been so narrowly concentrated, it is no surprise that risk aversion leads to large losses. Bitcoin is back to $42,000, and oil is holding at $82.10. Gold is steady at $1,827. Yields actually fell yesterday despite the hawkish Fed comments.
European markets are lower: Eurostoxx -0.2%, FTSE -0.1% and Dax -1%.
US futures are lower too: S&P and Dow are both -0.6%, while the Nasdaq is -0.7%.
Wall Street (QQQ) (SPY) Stocks News
US retail sales -1.9% versus -0.1% forecast. Core -2.3% versus 0.1% forecast.
ECB Lagarde says inflation to moderate later this year.
Citigroup (C) beats on top and bottom lines, but stock falls 4%.
Wells Fargo (WFC) beats on top and bottom lines but stock flat.
JPMorgan (JPM) beats on EPS, but revenue miss hits stock, now down 4% premarket.
Las Vegas Sands (LVS) up 9% on report of new laws in Macau. MGM up 4%.
Pfizer (PFE), BioNTech (BNTX), Moderna (MRNA): Pfizer down 2% premarket, Moderna and BioNTech down 4% as US Supreme Court blocked Biden’s vaccine or test mandate and officials question if Omicron boosters are needed.
BlackRock (BLK) missed on revenue, but EPS ahead.
Sherwin Williams (SHW) down 3% on cutting forecasts.
Boston Beer (SAM) cut earnings outlook, down 8% premarket.
Upgrades and Downgrades
Source: Benzinga Pro
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