The major stock indexes opened along the flatline on Friday after some of the largest U.S. banks reported mixed quarterly results.
The Dow Jones Industrial Average rose just 1 point with 3M outperforming and McDonald’s lagging. The S&P 500 slipped 0.06 percent as financials and telecom lagged. The Nasdaq Composite eked out a slight gain.
“This morning’s mixed, albeit modest, response to the earnings announcements from three of America’s biggest money center banks seemingly hints at an uneven upcoming reporting season,” said Jeremy Klein, chief market strategist at FBN Securities. ”However, if companies can maintain their extremely elevated profit forecasts for the next several quarters, then stocks should enjoy a stiff tailwind at their backs.“
J.P. Morgan Chase posted better-than-expected earnings and sales, as its trading revenue rose 13 percent in the second quarter on a year-over-year basis. Citigroup, meanwhile, posted a stronger-than-expected profit but its revenue for the quarter missed. J.P. Morgan Chase rose slightly, while Citigroup dropped more than 1 percent.
Wells Fargo’s earnings and revenue both missed as its fake-account scandal is still taking a toll on the company. The bank also said a tax hit of $481 million also pressured the results. Shares of Wells Fargo fell 3 percent.
Nick Raich, CEO of The Earnings Scout, said the biggest standout from these reports “was the anemic revenue growth from Citi and Wells Fargo.”
“There are several reasons for that including less demand for loans as companies receive major cash infusions from the Tax Cuts and Jobs Act,” Raich said.
Just over 5 percent of S&P 500 companies have reported second-quarter results thus far. These companies have posted earnings growth of 16.37 percent. However, analysts polled by FactSet expect second-quarter earnings to have grown by 20 percent.
Stocks are on track to post strong weekly gains, with the Dow, S&P 500 and Nasdaq all up more than 1 percent in the time period.