Traders work on the floor of the New York Stock Exchange (NYSE) on July 11, 2024 in New York City.
Spencer Platt | Getty Images
10 things to watch Friday, July 12
- Will the market rotation out of year-to-date tech winners and into the rest of the market continue? Usually, they tend to last three sessions. Interest rates are the key. The June producer price index was a bit hotter Friday morning; failing to confirm Thursday’s cooler consumer price index that flipped the market and boosted expectations for as many as three Federal Reserve interest rate cuts this year. The Nasdaq fell nearly 2% on Thursday, breaking a run of six straight record high closes.
- JPMorgan reported a top and bottom line beat: Revenue of $50.99 exceeded estimates of $49.87 billion; adjusted earnings per share (EPS) of $4.26 beat by 7 cents. No change to full-year 2024 expectation of $91 billion net interest income (NII) and $92 billion in adjusted expense. Investment banking (IB) fees top estimates by about $300 million. Equity trading was up 21% and fixed-income trading was up 5%.
- It was a mixed bag from Club name Wells Fargo. CEO Charlie Scharf’s push into building a premier investment bank continued to pay off as fee-based revenue helped drive the top and bottom line beats. Revenue of $20.69 billion beat estimates of $20.29 billion and EPS of $1.33 beat by 4 cents. However, the market focused on net interest income, which fell more year over year than expected and the stock dropped about 6%. The bank now sees full-year NII to decline 8% to 9% year over year when many expected an improvement from the down 7% to 9% guide. Non-Interest expense outlook was raised as well, but that’s off the stronger fee-base business. Wells bought back over $12 billion of stock in the first half of the year.
- Citigroup beat on revenue and earnings: $20.12 billion versus $20.07 billion expected and EPS of $1.52 vs. $1.39. NII of about $13.5 billion beat estimates of $13.22 billion.
- Tesla downgraded to sell from neutral at UBS on the belief that other initiatives (excluding auto) are priced into the stock too soon.
- Array Technologies upgraded to buy at Citi. They make tracking solutions for utility-scale solar, like Club name Nextracker. Solar stocks came alive Thursday as bond yields plummeted.
- Citi makes Wester Digital a 90-day upside call on confidence in flash memory pricing and undershipment to demand.
- Club name Starbucks price target was lowered to $98 per share from $104 at Morgan Stanley, which maintained an overweight buy rating. The analysts said the second half of the year is mostly de-risked after last quarter’s cut.
- AT&T shares dropped after the company provided more details of a widespread hack in April.
- Citi raised Chipotle price target to $71 per share from $67.38, expecting another revenue beat when the chain reports in a couple of weeks. The stock has been struggling to stabilize from its post-split volatility and concerns about higher promotional activity from other restaurants.
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