Pre-Markets Start Robust, Where They Left Off Friday

Monday, July 18, 2022

Pre-market futures are continuing their positive surge where they left off as of Friday’s close, with the Dow +240 points at this hour, the Nasdaq +100 and the S&P 500 +25 points. This follows the previous trading day’s +658 points, +201 and +72 points, respectively. This morning’s news on Boeing’s BA latest sale and Goldman Sachs’ GS Q2 earnings results are leading the way on the Dow.

Delta Air Lines DAL has announced this morning it will be purchasing 100 Boeing 737 MAX jets — the formerly beleaguered plane that was grounded for a year and a half following two deadly crashes — with an option for 30 more, at a cost north of $13 billion. This is great news for Boeing, as its stock is up +3.7% in early trading, and even Delta is +2% on this information. Boeing and Delta shares are down -29% and -25% year to date, respectively.

Goldman Sachs outperformed expectations on both top and bottom lines in its Q2 earnings report this morning, with earnings of $7.73 per share easily surpassing the $6.99 in the Zacks consensus, on quarterly revenues of $11.86 billion which beat the $11.05 billion expected. Earnings per share were nearly cut in half from a year ago, but still marks the ninth beat in the past 10 quarters.

Over the trailing four quarters, Goldman Sachs had been averaging nearly a +30% positive earnings surprise, which considerable in the financials space. Average Return on Equity (ROE) in Q2 slipped to +10.6% from +12.8% in Q1 — still not bad considering our present recessionary conditions. The Zacks Rank #3 (Hold)-rated investment bank has fallen -25% year to date. For more on GS’ earnings, click here.

On the other end of the big banks reporting this morning, Bank of America BAC missed expectations on both top and bottom lines, with earnings of 73 cents per share shy of the 77 cents in the Zacks consensus (and $1.03 per share in the year-ago quarter). The bank recorded a one-time provision on credit losses worth -$523 million. Revenues in the quarter reached $27.79 billion — beneath the $22.97 billion expected.

As we saw in earlier bank earnings numbers, Investment Banking fees for BofA plummeted -47% to $1.1 billion, buoyed somewhat by in-line Fixed Income business +19% to $2.3 billion in the quarter. This marks only the third earnings miss for the consumer banking giant in the past five years. Shares of BofA are +2.5% in pre-market trading on a fairly robust start to the week. For more on BAC’s earnings, click here.

After today’s closing bell, we’ll get earnings results from IBM Corp. IBM, which expects lower numbers on both earnings and sales than in the year-ago quarter. That said, the Zacks Rank #4 (Sell)-rated tech giant has only posted one earnings miss in the past eight years. As the week rolls along, we’ll also see economic data on Housing Starts, the Philly Fed, PMI Manufacturing and Services, and Jobless Claims.

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