Market participants have been watching the state of the economy closely, especially as a leadership transition in Washington is underway. Markets responded on Friday morning to the launch of President-elect Joe Biden’s stimulus plan, which includes increased aid to Americans, as well as several more controversial measures. Some investors were concerned about the package and its price, which lowered the shares. Starting at 11:30 am EST, the Dow Jones Industrial Average (DJINDICES: ^ DJI) dropped 147 points to 30,845. O S&P 500 (SNPINDEX: ^ GSPC) dropped 19 points to 3,776, and the Nasdaq Composite (NASDAQINDEX: ^ IXIC) dropped 60 points to 13,052.
This year, the upward momentum of the stock market compared to last year continues, but investors are waiting to see what companies would say about their business performance. The earnings season has finally started and market participants are getting their first readings on how the top market participants ended 2020. Today, the main bank stocks JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) released their latest results and shareholders were not entirely satisfied with what they saw. Meanwhile Blackberry (NYSE: BB) stocks soared when investors entered into an apparent deal with Facebook (NASDAQ: FB).
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Not good enough
Bank shares generally fell on Friday morning. JPMorgan Chase fell 2%, while Wells Fargo suffered a 6% decline.
JPMorgan’s downturn came despite some strong figures from the banking giant. Net revenue rose 3% from the previous year’s levels, and net income increased 42% year-over-year, mainly due to the release of $ 2.9 billion in credit reserves. A reduction in the share count boosted earnings per share growth to 47%. All of these numbers were better than most JPMorgan viewers expected.
JPMorgan has seen huge deposit growth, although it has not really increased its loan portfolio much. Even so, investors were impressed with this performance, given the slowdown in the economy. The bank also performed well in its institutional trading segment, as assets under management soared.
Wells Fargo did not do so well. Revenue fell almost 10% from the previous year’s levels and, although the company’s net revenue was higher, it grew only 4% compared to the fourth quarter of the previous year. Wells saw declines in credit activity in its consumer, commercial and corporate banking segments and, although deposits were generally higher, a weak interest rate environment kept net interest income low.
Both banks hope to restart their share buyback programs, and this may provide some support for the shares. For now, however, investors seem not to have gotten everything they wanted from the reports.
BlackBerry puts a cool battle in bed
BlackBerry’s shares rose 13% on Friday morning. The move follows a big leap on Thursday, and investors finally have a good idea of the cause.
Several sources reported that the BlackBerry had reached a settlement of patent disputes between the mobile phone pioneer and Facebook. The two companies were arguing over the amount of royalties Facebook should pay BlackBerry for using part of its intellectual property in messaging.
Investors hope the BlackBerry will be able to put things in the right direction again. After leaving production of devices, BlackBerry reinvented itself, with the goal of providing a common platform on which different sensors can communicate and share information.
Meanwhile, BlackBerry also has an impressive portfolio of intellectual property. The company is likely to continue to see licensing revenue increase – especially if it successfully defends its rights from other technology giants.