Stocks Falling in Wake of Mixed Banking Results

U.S. equities are lower in pre-market trading with the Street digesting a slew of results from the banking sector to kick off Q4 earnings season. Dow member JPMorgan Chase, Bank of America, and Wells Fargo all bested estimates, but each posted significant increases in provisions for loan losses, while Citigroup fell short of forecasts. Inflation remains in focus as well, as a read on import prices surprisingly increased, detracting some from yesterday's tamer read on consumer prices. Treasury yields are trading higher, and the U.S. dollar is nudging to the upside, while crude oil prices and gold are little changed. Later this morning, a read on consumer sentiment will hit the tape. Asia finished mostly higher, and Europe is mixed as investors assess yesterday's U.S. consumer price data and inflation reports within the region.

As of 8:55 a.m. ET, the March S&P 500 Index future is 37 points below fair value, the Nasdaq Index future is 126 points south of fair value, and the DJIA future is 291 points under fair value. WTI crude oil is increasing $0.12 to $78.52 per barrel, and Brent crude oil is gaining $0.03 to $84.06 per barrel. The gold spot price is trading $0.80 higher to $1,899.60 per ounce. Elsewhere, the Dollar Index is increasing 0.2% to 102.44.

Dow member JPMorgan Chase & Co. (JPM $139) reported Q4 adjusted earnings-per-share (EPS) of $3.57, ahead of the FactSet estimate for $3.08, as revenues jumped 18.1% year-over-year (y/y) to $34.55 billion, mostly in line with analysts' forecasts. Consumer banking, along with debit and credit card sales, were up 9%, with total revolving balances back to pre-pandemic levels. JPM also declared a $2.3 billion provision for credit losses for expected defaults, a 49% increase from last quarter. Chairman and CEO Jamie Dimon said while the U.S. economy remains strong, "…we still do not know the ultimate effect of the headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation that is eroding purchasing power and has pushed interest rates higher, and the unprecedented quantitative tightening."

Bank of America Corp. (BAC $34) posted adjusted Q4 EPS of $0.85, eclipsing the $0.77 FactSet estimate, with revenues rising 11.2% y/y to $24.53 billion, slightly north of the Street's forecast of $24.17 billion. BAC said net interest income rose 29% y/y to $14.7 billion amid the rise in interest rates, slightly below the Street's expectations, but helping to offset a 50% decline in investment banking fees of $1.1 billion. The bank also implemented $1.1 billion for credit losses, up $1.6 billion from a year ago, despite net charge-offs remaining below pre-pandemic levels.