Shares of Charles Schwab Corp. slumped 1.7% in premarket trading Tuesday, after the discount broker was downgraded by Raymond James analyst Patrick O'Shaughnessy, citing concerns over valuation and a lack of confidence in the advisory outlook. O'Shaughnessy cut his rating to market perform from outperform. "We are not sold on the notion that Schwab can meaningfully pivot towards a more advisory-type business model in a zero commission world," O'Shaughnessy wrote in a note to clients. "Furthermore, while Schwab enjoys the most scale and arguably best competitive positioning in the industry, it also is highly levered to interest rates and is an unlikely acquisition candidate due to its size." Therefore, he said he believes there are more attractive valuations within the online brokerage industry. The stock has run up 23% since closing at a 3-year low of $35.10 on Oct. 3, through Monday. It has gained 4.1% year to date, while the SPDR Financial Select Sector ETF has rallied 23.3% and the S&P 500 has advanced 22.8%.
Bank of America Corp. said Monday it is raising the U.S. minimum wage for hourly employees to $20 from $17, by the end of the first quarter of 2020. Since 2010, the bank has now increased its minimum wage by more than $8 an hour. "As part of our commitment to being a great place to work, we are saying thank you, and sharing our success with our teammates who serve our clients and communities every day," said Chief Human Resources Officer Sheri Bronstein. The stock rallied 1.4% in premarket trading. It has run up 29.1% year to date through Friday, while the SPDR Financial Select Sector ETF has advanced 22.3% and the Dow Jones Industrial Average has gained 17.2%.
Financial stocks rose in premarket trading Monday, after J.P. Morgan analyst Vivek Juneja raised his price targets on a number of large-capitalization banks, as he removed his previous assumption that the Federal Reserve would cut interest rates in December. While expects near-term earnings for the group to be clouded by the "continued sizable decline" in net interest margin, he expects the pace of the decline to slow in 2020 given the Fed's less-dovish tone last week. The SPDR Financial Select Sector ETF rose 1.0% in premarket trading, while futures for the Dow Jones Industrial Average climbed 165 points, or 0.6%. Among the more active components, shares of Bank of America Corp. rose 1.3%, after Juneja raised his price target to $33.50 from $33.00; Citigroup Inc.'s stock tacked on 1.4%, as the price target goes up to $84.50 from $77.50; Wells Fargo & Co. shares gained 0.9%, after Juneja raised his target to $51 from $48. Juneja also raised his targets for BB&T Corp. to $57.50 from $53.50, Citizens Financial Group Inc. to $43.00 from $39.50, Fifth Third Bancorp to $33.50 from $30.50, PNC Financial Services Group Inc. to $155.05 from $147.50, for Regions Financial Corp. to $19.00 from $17.50 and for U.S. Bancorp to $58.00 from $55.50.
Financial stocks got an early boost Friday, as a stronger-than-expected government jobs report helped drive up Treasury yields. The SPDR Financial Select Sector ETF rose 0.7% in premarket trading, after being unchanged just before the jobs data was released. Meanwhile, futures for the Dow Jones Industrial Average rose 111 points. Among some of the financial ETF's more heavily weighted components, shares of Bank of America Corp. rallied 1.2%, compared with a pre-data gain of 0.3%; J.P. Morgan Chase & Co. hiked up 0.8% vs. a pre-data gain of 0.3%; Citigroup was unchanged pre-data, but was recently up 0.8%; Wells Fargo & Co. jumped 1.1%, after being unchanged just before the data. The yield on the 10-year Treasury note rose 2.6 basis points to 1.717%. Higher longer-term yields can increase what banks earn from funding longer-term assets, like loans, with shorter-term liabilities.
Shares of American Express Co. surged 2.1% premarket after the credit card and travel services company reported a third-quarter profit and revenue that rose above expectations, citing higher card member spending, net interest income and card fees. Net income rose to $1.76 billion, or $2.08 a share, from $1.65 billion, or $1.88 a share, in the year-ago period. Excluding non-recurring items, adjusted earnings per share of $2.08 topped the FactSet consensus of $2.03. Revenue increased 8% to $10.99 billion, above the FactSet consensus of $10.94 billion. Within the company's business segments, consumer services revenue rose 11% to $5.4 billion, commercial services grew 7% to $3.4 billion and merchant and network services revenue increased 5% to $1.7 billion. Looking ahead, AmEx expects 2019 adjusted EPS of $7.85 to $8.35, which surrounds the FactSet consensus of $8.01. "The trends we saw in the business this quarter continue to be consistent with an economy that continues to grow, albeit at a more modest pace than last year," said Chief Executive Steve Squeri. The stock has lost 7.2% over the past three months, while the SPDR Financial Select Sector has slipped 0.1% and the Dow Jones Industrial Average has eased 0.7%.
Shares of Morgan Stanley surged 4.2% in premarket trading Thursday, after the bank and broker reported third-quarter profit and revenue that rose above expectations, as strength in its institutional securities and investment management businesses offset some weakness in wealth management. Net income rose to $2.06 billion, or $1.27 a share, from $2.02 billion, or $1.17 a share, in the year-ago period. The FactSet consensus for earnings per share was $1.11. Revenue grew 2% to $10.03 billion from $9.87 billion, while the FactSet consensus was for a decline to $9.59 billion, as net interest income jumped 30% to $1.22 billion to top expectations of $963.3 million. Institutional securities revenue increased 1.9% to $5.02 billion from $4.93 billion, while the FactSet consensus was for a decline to $4.51 billion, as a 4% rise in investment banking revenue to $1.64 billion beat expectations of $1.43 billion. Equity sales and trading revenue fell to to $1.99 billion from $2.02 billion, missing expectations of $2.10 billion, but fixed income sales and trading revenue rose to $1.43 billion from $1.18 billion to beat expectations of $1.11 billion. The stock has gained 7.9% year to date through Wednesday, while the SPDR Financial Select Sector ETF has rallied 18% and the S&P 500 has advanced 19%. (This replaces an earlier item that incorrectly reported the year-to-date performance of Morgan Stanley's stock.)
Shares of Bank of America Corp. rallied 2.3% toward a sixth straight gain in morning trading Wednesday, after the bank beat third-quarter earnings expectations and provided an upbeat outlook on the U.S. economy. That would match the 6-day win streak ending Jan. 18. Chief Executive Brian Moynihan said on the post-earnings conference call with analysts that despite repeated discussions around a potential recession and concerns over the impact of the U.S.-China trade war, the bank's activities suggests the U.S. economy is in "solid shape" and the consumer continues to benefit by strong employment prospects." Moynihan said he should know, since BofA's annual customer outgoing payments of nearly $3 trillion represents about 15% of the U.S. economy. He said consumer payments are up 6% year to date from the same period a year ago. In addition, Moynihan said commercial loans grew 6%, including 6% growth in the small-business segment. "These are tangible examples that the U.S. economy is in solid shape despite the worries about trade wars, capital investment slowdowns and other global macro conditions," Moynihan said, according to a FactSet transcript. Moynihan did say, however, the bank managed to generate operations savings despite a lower interest rate environment and "other revenue challenges with a slowing economy." The stock has gained 6.6% over the past 12 months, while the Dow Jones Industrial Average has advanced 4.7%.
Shares of Bank of America Corp. rallied 2.7% in afternoon trading, after Bloomberg reported that Warren Buffett's investment vehicle Berkshire Hathaway Inc. has asked the Federal Reserve for permission to boost its stake to above the 10% level, as holding a stake of more than 10% often triggers a regulatory review. Berkshire Hathaway is Bank of America's largest shareholder, with 950 million shares, or 10% of the shares outstanding, according to FactSet. The stock's rally comes a day before the bank is scheduled to report third-quarter results, before the stock market's opening bell. The stock has tacked on 2.4% over the past three months, while the SPDR Financial Select Sector ETF has slipped 0.1% and the Dow Jones Industrial Average has eased 1.1%.
Shares of Wells Fargo & Co. lost 0.6% in premarket trading Tuesday, after the bank reported third-quarter profit that missed expectations, while revenue surprisingly rose. Net income fell to $4.61 billion, or 92 cents a share, from $6.01 billion, or $1.13 1 share, in the same period a year ago. The latest quarter's earnings per share included a 35-cent litigation accrual and a 20-cent gain on the sale of assets. The FactSet EPS consensus was $1.24. Total revenue rose to $22.01 from $21.94 billion, while the FactSet consensus was for a decline to $21.09 billion. Net interest income fell 7.5% to $11.6 billion, to miss the FactSet consensus of $11.7 billion, while noninterest income rose 11% to $10.4 billion to beat expectations of $9.6 billion. Net interest margin declined to 2.66% from 2.94%, missing expectations of 2.68%. The stock has rallied 5.5% over the past three months through Monday, while the SPDR Financial Select Sector ETF has slipped 1.7% and the S&P 500 has eased 1.6%.
Shares of Citigroup Inc. edged up 0.1% in seesaw morning trading Monday, a day before the bank is scheduled to report third-quarter results. Citigroup has beat earnings expectations the past 18-straight quarters, but the stock has declined the day those beats were reported 11 times. The bank beat second-quarter total revenue expectations, but missed the previous four quarters, as global consumer banking revenue missed the previous five quarters while institutional clients group revenue beat the past 2 quarters, and 3 times in the past 5 quarters. The average estimates of the analysts surveyed by FactSet are earnings per share of $1.95, total revenue of $18.54 billion, global consumer banking revenue of $8.70 billion and institutional clients group revenue of $9.43 billion. Citi's stock, which was down as much as 0.8% earlier, has slipped 2.2% over the past three months, while the SPDR Financial Select Sector ETF has slipped 2.2% and the Dow Jones Industrial Average has eased 1.8%. (This updates an earlier item that incorrectly reported which quarter Citigroup will be reporting on Tuesday.)
Exchange-traded funds with exposure to financial sector stocks popped higher Friday after the Federal Reserve announced plans to buy Treasury bills in order to maintain reserves in the banking system. Yields on U.S. government bonds, including the benchmark 10-year [S: tmubmusd10y], have soared this week on hopes for a U.S.-China trade deal. The Vanguard Financials ETF was 2.1% higher late morning, and the Financial Select Sector SPDR was up 2.2%. Banks benefit from higher yields overall, and from a wider spread between the short-term yields they pay for deposits and the longer-term yields they receive for lending.
Financial stocks traded broadly higher Friday, as hopes for at least a limited U.S.-China trade deal helped boost Treasury yields. A surge in U.K. bank stocks on growing hopes of a Brexit deal also provided a bullish backdrop for the sector. The SPDR Financial Select Sector ETF climbed 1.6% ahead of the open. Among the sector tracker's more-active components, shares of Bank of America Corp. hiked up 2.0%, Citigroup Inc. rose 2.1%, Morgan Stanley advanced 1.4% and Wells Fargo & Co. tacked on 1.5%. Meanwhile, the U.S.-listed shares of Lloyds Banking Group PLC shot up 13%, Royal Bank of Scotland Group PLC soared 15% and Barclays PLC ran up 8%. Futures for the Dow Jones Industrial Average rallied 258 points, while the yield on the 10-year Treasury note rose 2.1 basis points to 1.677%. Higher Treasury yields can help boost bank profits, as that can increase the spread banks earn from funding longer-term assets, like loans, with shorter-term liabilities.
Financial stocks took a broad beating Tuesday, as Treasury yields dropped amid growing concerns that U.S.-China trade talks could break down before they get started. The SPDR Financial Select Sector ETF shed 1.8% in morning trading, and was the weakest ETF tracking the S&P 500's 11 key sectors, with all 67 components trading lower. Among the most active members, shares of Bank of America Corp. sank 2.3%, Citigroup Inc. shed 2.6%, J.P. Morgan Chase & Co. gave up 2.1%, Wells Fargo & Co. slid 1.9% and Charles Schwab Corp. declined 1.3%. Meanwhile, the yield on the 10-year Treasury note fell 4.1 basis points to a 5-week low of 1.514%, after the Trump administration blacklisted several China-based technology companies, Bloomberg reported that the administration was discussing possible restrictions on capital flows into China and the South China Morning Post reported that the China delegation to Washington later this week has cut its stay short by a night. Falling Treasury yields can hurt bank profits, as it can reduce the spread banks earn by funding longer-term assets, like loans, with shorter-term liabilities. The financial ETF has lost over 4% over the past three months, while the S&P 500 has eased 2.3%.
Financial stocks pulled a sharp U-turn in premarket trading Friday, swinging to broad gains from broad losses, after the government's September jobs report, which showed new hiring was less than expected but the unemployment surprisingly fell. The SPDR Financial Select Sector ETF rose 0.3% ahead of the open, after being down 0.4% just before the jobs data. Among the sector tracker's more-active components, shares of Bank of America Corp. rose 0.3%, compared with a pre-data loss of 0.3%; Citigroup Inc. swung to a gain of 0.3% from a decline of 0.1% and J.P. Morgan Chase & Co. rose 0.2%, reversing a pre-data loss of 0.3%. Wells Fargo & Co.'s was little changed, erasing an earlier loss of 0.1%. Meanwhile, futures for the Dow Jones Industrial Average rose 33 points, versus a per-data decline of 78 points.
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|Company||Symbol||Total Net Assets|
|Berkshire Hathaway Inc. Cl B||BRK.B||12.72%|
|JPMorgan Chase & Co.||JPM||12.19%|
|Bank of America Corp.||BAC||8%|
|Wells Fargo & Co.||WFC||6.32%|
|American Express Co.||AXP||2.44%|
|CME Group Inc. Cl A||CME||2.25%|
|Goldman Sachs Group Inc.||GS||2.11%|
|Portfolio Style||Financial Services|
|Fund Inception||December 16, 1998|
The Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Financial Select Sector Index. Under normal market conditions, the fund generally invests substantially all, but at least 95%, of its total assets in the securities comprising the Index. (See Full Profile)