Market participants have been keeping a close eye on the state of the economy, especially as a leadership transition is underway in Washington. Markets responded Friday morning to the announcement of President-elect Joe Biden’s stimulus plan, which includes increased aid to Americans, as well as several controversial measures. Some investors are worried about the package and the price price that caused shares to fall lower. From 11:30 EST the Dow Jones Industrial Average (DJINDICES: ^ DJI) decreased by 147 points to 30,845. S&P 500 (SNPINDEX: ^ GSPC) fell 19 points to 3,776, and the Nasdaq Compound (NASDAQINDEX: ^ IXIC) dropped 60 points to 13,052.
This year, the stock market’s upward momentum continued from last year, but investors waited to see what companies would say about their business. The earnings season has finally begun, and market participants are getting their first lectures on how top players finished in 2020. Today, the largest bank shares JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) announced their latest results, and shareholders were not entirely happy with what they saw. Meantime BlackBerry (NYSE: BB) the shares soared when investors made an apparent settlement with Facebook (NASDAQ: FB).
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Not good enough
Shares in bank shares were generally lower on Friday morning. JPMorgan Chase was down 2%, while Wells Fargo was down 6%.
The decline of JPMorgan came despite the strong numbers of the banking giant. Net income increased 3% from the previous year, and net income was 42% higher than a year ago, mainly due to the release of $ 2.9 billion in credit reserves. A decrease in the number of shares increased the growth in earnings per share to 47%. All of these figures were better than most of those who watched JPMorgan expected.
JPMorgan experienced tremendous deposit growth, although it did not really increase its loan portfolio much. Nevertheless, investors were impressed by the performance, given the sluggish economy. The bank also achieved strong results in its institutional trading segment as assets under management soared.
Wells Fargo did not do so well. Revenue was almost 10% lower than in the previous year, and although the company’s net revenue was higher, it grew by only 4% compared to the fourth quarter of the previous year. Wells saw a decline in lending activity in its consumer, commercial and corporate banking sectors, and although deposits were generally higher, a weak interest rate environment kept net interest income low.
Both banks expect to restart their stock repurchase programs, and this could support the stock. For now, however, investors do not seem to have got everything they want from the reports.
BlackBerry sues
Shares in BlackBerry rose 13% on Friday morning. The move follows a big jump on Thursday, and investors finally have a good idea of the matter.
Several sources reported that BlackBerry has come to a solution to patent disputes between the mobile pioneer and Facebook. The two companies argued over the amount of royalties that Facebook has to pay BlackBerry for the use of some of its intellectual property.
Investors hoped BlackBerry could get things moving in the right direction again. After mobile phone production declined, BlackBerry rediscovered itself with the goal of providing a common platform on which different sensors could communicate and share information.
Meanwhile, BlackBerry also has an impressive portfolio of intellectual property. It is likely that the company will be able to continue to take in license revenue – especially if it can successfully defend its rights from other technology giants.