Title: Bank of America and Goldman Sachs Report Mixed Earnings as Retail Sales Surpass Expectations
Subtitle: The American consumer continues to defy predictions of a slowdown
Date: October 17, 2023
Yahoo Finance –
In the midst of earnings season, Bank of America and Goldman Sachs have reported different financial results. Bank of America’s third quarter profits rose by 10% compared to the previous year, benefiting from higher interest income and a strong performance from its Wall Street unit. The bank reported earnings of $7.8 billion and revenue of $25.2 billion, which reflects a 3% increase from the same period last year. Net interest income also rose by 4% year over year, indicating signs of a recovering dealmaking sector.
On the other hand, Goldman Sachs experienced a decline in profits as it continued to withdraw from consumer banking and struggle with a prolonged slump in dealmaking. Its earnings for the third quarter were $2.06 billion, representing a 33% decrease compared to $3.07 billion the previous year. These results were affected by write-downs and impairments on real estate investments. In comparison to its big-bank rivals such as JPMorgan, Citigroup, Wells Fargo, and Bank of America, Goldman Sachs’ performance during the quarter fell behind as they reported profit increases year over year.
Despite these mixed earnings reports, the American consumer continues to surprise Wall Street. New data released by the Commerce Department indicates that retail sales rose by 0.7% in September, exceeding Wall Street’s estimates for a 0.3% growth. Sales excluding auto and gas increased by 0.6%, surpassing estimates for a 0.1% increase. Moreover, August’s sales were revised up from a 0.6% to a 0.8% increase. This unexpected resilience in consumer spending provides a positive outlook for the US economy, even as the Federal Reserve maintains its interest rate hiking campaign to address inflation concerns.
The September retail sales report showed increases in nine out of thirteen categories, with the largest gains seen in sales at miscellaneous store retailers (3%), nonstore retailers (1.1%), and motor vehicle and parts dealers (1%). However, electronics & appliance stores and clothing sales experienced a decline of 0.8% compared to the previous month.
The stock market responded to these developments as futures for the Dow Jones Industrial Average, S&P 500, and Nasdaq 100 opened lower due to the mixed earnings reports and stronger-than-expected retail sales data. The 10-year Treasury yield also rose by 12 basis points to trade around 4.83%, signaling concerns about inflationary pressures.
In addition to earnings reports and retail sales data, the ongoing Middle East conflict and the Biden administration’s crackdown on the sale of semiconductors to China have also influenced market sentiment. Investors are closely monitoring geopolitical tensions and their potential impact on the global economy.
As earnings season progresses, market participants will be looking to gain further insight from companies such as Tesla and Netflix, which are set to report their results in the coming days. These tech sector earnings will provide valuable information on the effects of higher borrowing costs on corporate performance.
Overall, while there are still uncertainties in the market, encouraging signs of a possible end to the recent earnings recession and strong consumer spending indicate a positive outlook for the US economy as it navigates through volatile times.