It was a robust session for the bulls, with another notable gain in the stock market today. The S&P 500 rose 3%, even as the banks failed to paint an optimistic outlook on the economy.
Speaking of economic outlooks, the International Monetary Fund wasn’t very optimistic either. The world will “very likely” experience the worst economy contraction since the Great Depression, according to the IMF.
The “Great Lockdown” thrust the global economy into a chaotic situation, as all sorts of businesses experienced a massive disruption. The IMF expects a 3% contraction in global GDP this year, which would make it one of the worst economic years. That’s a drastic change from the 3.3% growth it was expecting in January.
JPMorgan (NYSE:JPM) is considered an industry leader and best-in-class bank. So to see the company go from a 3.8% gain in early trading to a near-5% loss at one point was troubling. The move came after a miss on both earnings and revenue.
Sales missed estimates by more than $1 billion and contracted 3% year-over-year. However, a big portion of the profit miss was due to the company’s significant increase in reserves. JPMorgan bumped its reserves by $6.8 billion or $1.66 per share, to $8.3 billion. That’s up from just $1.5 billion a year ago, to give a sense of this move.
Wells Fargo (NYSE:WFC) also reported disappointing quarterly figures, falling more than 4% as a result. While non-GAAP earnings of 80 cents per share beat expectations by 18 cents, GAAP earnings of just 1 penny badly missed estimates. Further, revenue of $17.7 billion contracted 18.8% year-over-year and missed consensus estimates by $1.6 billion.
On a brighter note, Johnson & Johnson (NYSE:JNJ) beat both top- and bottom-line estimates. Earnings of $2.30 per share smashed expectations by 30 cents, while revenue of $20.7 billion grew 3.3% year-over-year and beat expectations by more than $1.2 billion. The company also gave a 6.3% bump to the dividend, which now yields 2.9%.
However, management significantly dropped its full-year expectations. The company now expects 2020 sales between $77.5 billion to $80.5 billion, down from a prior outlook of $85.4 billion to $86.2 billion. They expect adjusted operational earnings between a range of $7.65 to $8.05 per share vs. a prior outlook of $9 to $9.15 per share.
J&J was a Top Stock Trade from Tuesday.
Movers in the Stock Market Today
JPMorgan analyst Steven Tusa cut General Electric’s (NYSE:GE) price target from $6 to $5 and maintained a “neutral” rating. Tusa states that the company “has historically been, and remains the most expensive value trap we’ve seen.” This news comes just one day after GE’s debt buyback and bond sale.
To help keep Dave & Buster’s Entertainment (NASDAQ:PLAY) afloat during this time, the company is making a deal with Jefferies to sell up to $75 million in equity via an at-the-market offering. After a precipitous decline in its stock price and a severe dent in business, Dave & Buster’s plans to use the money to improve its balance sheet.
Boeing (NYSE:BA) reported just 50 deliveries in the first quarter of 2020, missing expectations of 60 deliveries and down significantly from the 149 deliveries it reported in the first quarter of 2019. In March, Boeing had to remove over 300 jetliners from its order book and has suffered 150 cancellations of its 737 Max aircraft.
Shares fell 4.3% in the stock market today.
Advanced Micro Devices (NASDAQ:AMD) will launch three new Epyc server processors — the 7F32, the 7F52 and the 7F72 — to compete with Intel (NASDAQ:INTC) in the data center business. Reportedly, the chips can reduce cost of ownership by 50% compared to Intel’s Xeon processors. AMD has continued to make a larger push into data centers, as it looks for further growth amid improving technology.
Chesapeake Energy (NYSE:CHK) just approved a reverse stock split of 1 for 200. This move will be implemented on April 15. It will decrease Chesapeake’s outstanding shares down to roughly 9.78 million from 1.96 billion. The split is being engineered to maintain the minimum requirements of the New York Stock Exchange.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.