US stocks rise after three top Wall Street banks crushed earnings and a lively Coinbase listing

nyse surprised trader
  • US stocks rose on Thursday following blockbuster earnings results from three large banks.
  • Coinbase made its splash on the Nasdaq, closing its first day of trading at a valuation of $86 billion.
  • Fed Chair Powell said the central bank will scale back bond purchases before lifting interest rates.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

US stocks edged higher on Thursday after three of the largest US banks beat analyst expectations with their first-quarter results, and Coinbase began trading at a valuation of more than $100 billion.

The crypto exchange’s shares closed 14% lower at $328.28 per share on Wednesday, giving it a valuation of $86 billion on a fully diluted basis.

Futures on the Dow Jones, S&P 500, and Nasdaq rose between 0.3% and 0.6%, suggesting a higher open for US indices later in the day.

JPMorgan reported a 25% jump in trading revenue even as analysts expected lower volumes across the market, with an overall revenue of $33 billion for the quarter. Revenue estimates were $30.4 billion.

Goldman Sachs too posted a profitable quarter on the back of strong trading and deal-making. Wells Fargo’s earnings topped estimates as its quarterly net income rose to $4.7 billion, helped by a larger than expected release of loan loss reserves.

Fed Chairman Jerome Powell reiterated on Wednesday the central bank won’t taper its emergency asset purchases until it sees progress on its goals of above 2% inflation and maximum employment. Powell disclosed he hasn’t had conversations on policy with President Joe Biden – a sharp contrast from how former President Donald Trump frequently urged the Fed to lower interest rates and critiqued its independence.

Elsewhere in Europe, ECB President Lagarde said at a Reuters event the euro zone economy is still standing on “two crutches” of monetary and fiscal stimulus, and they shouldn’t be removed until full recovery.

Members of the ECB are scheduled to meet next week for the first time since they increased the pace of the Pandemic Emergency Purchase Programme to decelerate the surge in bond yields.

London’s FTSE 100 rose 0.3%, the Euro Stoxx 50 rose 0.2%, and Frankfurt’s DAX rose 0.4%.

Asian markets were trading lower aside data showing India reported a record 200,000 new coronavirus cases.

Shares in Japan firms with strong Chinese ties declined ahead of Prime Minister Yoshihide Suga’s meeting with President Joe Biden, as investors are wary of potential pressure to align with Washington’s tough stance on Beijing.

China’s Shanghai Composite fell 0.5%, Japan’s Nikkei gained 0.07%, and Hong Kong’s Hang Seng fell 0.4%.

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Bed Bath & Beyond tumbles 15% as store closures weigh on quarterly sales

Mark Tritton Bed Bath & Beyond store CEO
Bed Bath & Beyond CEO Mark Tritton.

  • Bed Bath & Beyond shares lost as much as 15% on Wednesday following mixed first-quarter results from the house goods seller.
  • First-quarter sales of $2.62 billion slightly missed Wall Street’s consensus estimate of $2.63 billion.
  • The retailer reaffirmed its sales outlook for fiscal 2021.
  • See more stories on Insider’s business page.

Bed Bath & Beyond shares were knocked sharply lower Wednesday after first-quarter sales results from the housewares retailer fell short of Wall Street’s target.

The company on Wednesday posted quarterly adjusted earnings of $0.40 per share, higher than the analyst consensus estimate of $0.41 per share from Refinitiv and up from $0.38 per share a year earlier.

Sales for the quarter ended Feb. 29 fell by 16% to $2.62 billion from $3.11 billion a year ago, slightly missing the $2.63 billion that Wall Street had anticipated.

Shares fell as much as 15% to $23.68 in heavy volume before the losses were pared to 10% during the session. The company’s stock has soared over the past year from about $4 each.

Bed Bath & Beyond, which is executing a turnaround plan, said quarterly sales were hurt in part by divestitures and permanent store closures. Bed Bath & Beyond in January sold Cost Plus World Market to private equity firm Kingswood Capital Management and in November completed the sale of Christmas Tree Shops and its institutional Linen Holdings business.

First-quarter comparable store sales decreased 20%, the company said. Total enterprise same-store sales rose by 4% while online sales surged by 86%. The company said its strongest categories during the period included bedding, bath and kitchen food preparation.

The company reaffirmed its fiscal 2021 outlook for net sales of $8 billion to $8.2 billion and its adjusted EBITDA guidance of $500 billion to $525 million.

“As our transformation continues to take hold, we will show up differently for our customers with enhanced omnichannel experiences and modern stores,” among other actions, said Mark Tritton, Bed Bath & Beyond’s president and CEO, in the earnings statement.

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US stocks hover near record highs as traders digest strong mega-cap bank earnings

NYSE traders
  • The S&P 500 stuck close to record highs as the first-quarter earnings season kicked off.
  • Goldman Sachs, JP Morgan Chase and Wells Fargo each turned in better-than-expected results.
  • Coinbase will make its trading debut on Wednesday.
  • See more stories on Insider’s business page.

US stocks clung near record highs Wednesday as the first-quarter earnings season began its shift into high gear with blowout earnings results from big banks including Goldman Sachs.

The S&P 500 sought to build on its record close Tuesday that was led by tech stocks. Shares in that sector were also higher on Wednesday, giving a boost to the Nasdaq Composite.

The new quarterly earnings season started out with JP Morgan Chase JP Morgan Chase and Wells Fargo each turning in profit that surpassed Wall Street’s targets. Goldman Sachs beat revenue and profit expectations, aided by strong trading and investment banking revenue.

Here’s where US indexes stood at 9:30 a.m. on Wednesday:

A light economic calendar will “leave plenty of time for investors to watch the debut of Coinbase to the public markets. The listing couldn’t come at a better time for the company as crypto-currencies have been on absolute fire with both bitcoin and ether trading at record highs and riding what looks to be their seventh straight day of gains,” said Paul Hickey, co-founder of equity research firm Bespoke in a note.

Around the markets, Credit Suisse reportedly put $2 billion of Archegos-linked stocks on the market after the hedge fund’s meltdown. Part of the stock offering included Discovery Communications whose shares were lower Wednesday.

The First North American bitcoin ETF surges beyond $1 billion under management.

Gold fell 0.5% to $1,737.50 per ounce. Long-dated US treasury yields rose, with the 10-year yield at 1.634%.

Oil prices rose. West Texas Intermediate crude gained 2.2% to $61.50 per barrel. Brent crude, oil’s international benchmark, moved up 2.1% to $65.05 per barrel.

Bitcoin surged to $64,115.

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JPMorgan’s Q1 earnings smash estimates with a 14% jump in net revenue boosted by its investment bank

JPMorgan CEO Jamie Dimon
JPMorgan CEO, Jamie Dimon.


JPMorgan, the top US bank by assets, reported first-quarter earnings on Wednesday, beating consensus estimates of analysts polled by Bloomberg on strong trading revenue.

It is the first major bank to report results this quarter, paving the way to offer a look at how banking businesses are faring alongside progress in COVID-19 vaccinations.

The bank’s net revenue came in at $33 billion, up 14% from a year ago, driven by its performance in the corporate and investment-banking division.

“JPMorgan Chase earned $14.3 billion in net income reflecting strong underlying performance across our businesses, partially driven by a rapidly improving economy,” CEO Jamie Dimon said in a statement.

“With all of the stimulus spending, potential infrastructure spending, continued Quantitative Easing, strong consumer and business balance sheets and euphoria around the potential end of the pandemic, we believe that the economy has the potential to have extremely robust, multi-year growth.”

Here are the key numbers:

  • Net income: $14.3 billion versus $9 billion estimated
  • Earnings per share: $4.50 versus $3.13 estimated
  • Revenue: $33.1 billion versus $30.3 billion estimated

The jump in profit was partly driven by a release of loan loss reserves, in the amount of $5.2 billion this quarter. Last quarter, the bank released $2.9 billion in reserves.

The bank had set aside reserves of $26 billion in anticipation of a wave of loan defaults amid the coronavirus pandemic. Dimon said he believed the amount is “appropriate and prudent, all things considered.”

JPMorgan’s corporate and investment-banking divison was the standout performer, with a 46% jump in net revenue to $14.6 billion. Its robust performance was fuelled by a surge in deal-making as the bank advised on 126 deals worth about $208 billion in the first-quarter, according to GlobalData.

JPMorgan’s shares are up 21% since the start of this year.

Goldman Sachs and Wells Fargo are expected to report first-quarter results later on Wednesday.

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US companies are expected to see their strongest profit growth in nearly 20 years after downward revisions were ‘too aggressive’

oil texas
First-quarter earnings projections for the energy sector have more than doubled.

  • Earnings for S&P 500 companies are expected to rise by 6% in the first quarter of 2021, according to FactSet data.
  • A 6% increase would mark the largest rise since the firm starting tracking the bottom-up EPS estimate in early 2002.
  • The energy and materials sectors are on track to post double-digit increases in earnings.
  • See more stories on Insider’s business page.

Expectations for quarterly earnings growth are at their strongest in about two decades as analysts pencil in the impact of the US economy’s acceleration out of recession, led by projections for earnings in the energy sector to more than double.

A big wave of financial reports should hit Wall Street in mid-April, with big banks including JPMorgan Chase, Goldman Sachs and Wells Fargo among the companies that will kick off the first-quarter earnings season for 2021.

Ahead of that, Wall Street analysts are looking for S&P 500 500 companies overall to post a 6% increase in bottom-up per-share earnings, according to FactSet. A 6% rise would represent the largest increase since the financial-data firm began tracking the earnings estimate in the second quarter of 2002. Earnings, on average, are currently expected to come in at $39.86 per share.

The bottom-up EPS estimate is an aggregation of the median first-quarter earnings-per-share estimates for all of the companies in the S&P 500, FactSet said in a note published Thursday.

The projected 6% increase stands out in part because a bottom-up EPS estimate usually decreases during a quarter. FactSet said during the past five years, the estimate has recorded a decline of 4.2% during a quarter, and during the past 15 years, it has tended to post a decrease of 5.1%.

Analysts “may have been too aggressive in their downward revisions to EPS estimates during the first half of 2020 at the height of the COVID-19 lockdowns,” wrote John Butters, senior earnings analyst at FactSet, in looking at the factors behind the boost in first-quarter projections.

The global economy sunk into recession last year as the coronavirus pandemic forced businesses worldwide to close or reduce operations to curb the spread of the respiratory disease. The US economy contracted by 33% in the second quarter of 2020.

But analysts in the third quarter of 2020 began raising their earnings expectations for that quarter and beyond. FactSet foresees US gross domestic product expanding by 5.7% in 2021, higher than the projected 4% rate on December 31.

Read more: Goldman Sachs says buy these 33 stocks now as profits rebound for companies that suffered the most during the pandemic

Rising commodity prices and interest rates also appear to be fueling upward revisions. Oil prices have jumped by more than 20% to top $59 a barrel during the first quarter and the yield on the 10-year Treasury note quickly scaled up above 1.7% during the first three months of this year from 0.92%.

The highest percentage increases in bottom-up EPS estimates are for the energy, materials, and financials sectors as they are “likely benefitting from either higher commodity prices (Energy and Materials) or higher interest rates (Financials),” said Butters.

Per-share earnings estimates for the energy sector have shot up by 123%, to $2.55 from $1.14, the largest boost in projections among the 11 sectors tracked on the S&P 500 index. The financial sector is forecast to post a collective earnings increase of about 13% for the first quarter.

“Finally, companies in the S&P 500 have been much more optimistic in their EPS guidance than normal,” said Butters, noting that 61 companies have issued positive first-quarter guidance, well above the five-year average of 35.

“If 61 is the final number for the quarter, it will mark the highest number of S&P 500 companies issuing positive EPS guidance for a quarter since FactSet began tracking this metric in 2006,” he said.

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Micron Technology jumps 6.5% after beating top and bottom-line analyst estimates, posting positive outlook

Micron HQ
Micron Technology HQ in Boise, Idaho.

Micron Technology jumped as much as 6.5% on Thursday after beating top and bottom-line analyst estimates and posting a positive outlook in its fiscal second-quarter earnings release.

The Boise, Idaho-based memory and storage solutions provider posted non-GAAP net income of $1.13 billion which equates to earning per share of $0.98. The figure topped consensus estimates by $0.03.

Micron also saw revenues jump 30% from $4.8 billion for the same period last year to $6.24 billion in its fiscal second-quarter results, topping analysts’ consensus estimates of $6.21 billion.

Operating cash flow of $3.06 billion was strong in comparison to the $1.97 billion for the prior quarter and $2 billion for the same period last year as well.

Micron stock traded up 5% at $92.61 as of 11:33 a.m. ET on Thursday, having hit a session high at $94.38 earlier.

The company guided for revenue of between $6.9 billion and $7.3 billion in the upcoming fiscal third quarter. That’s compared to $5.44 billion from the same period a year ago. Gross margins are expected to be 41.5% with GAAP Diluted EPS hitting $1.52.

“Micron’s strong fiscal second-quarter performance reflects rapidly improving market conditions and continued solid execution,” said Micron Technology President and CEO Sanjay Mehrotra.

“Our technology leadership in both DRAM and NAND places Micron in an excellent position to capitalize on the secular demand driven by AI and 5G, and to deliver new levels of user experience and innovation across the data center and intelligent edge,” the CEO added.

Micron Technology has traded steadily between $90-$95 per share over the last month, but the stock is up roughly 93% in the past six months.

Ahead of earnings, Rosenblatt Securities analyst Hans Mosesmann reiterated his “buy” rating and price target of $150 on the firm.

Needham & Company also maintained its “buy” rating on shares of Micron with a price target of $120.

Rosenblatt’s price target represents a potential 61% surge from April 1 intraday highs, while Needham’s represents a potential 30% jump.

Overall analysts are bullish on shares of Micron. The company boasts 47 “buy” ratings, 10 “neutral” ratings, and just one “sell” ratings from analysts.

Micron traded up 3.75% as of 1:44 p.m. ET after paring gains on Thursday.

MU stock chart
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Chewy shares leap 13% after surprise swing to quarterly profit

Chewy Taco Cat Halloween Costume
  • Chewy shares climbed by 13% Wednesday following the fourth-quarter results from the pet-products seller.
  • The company swung to a profit of $0.05 a share, surprising analysts who had expected a loss of $0.10 a share.
  • Chewy’s first-quarter sales forecast of $2.11 billion to $2.13 billion was above Wall Street’s target.
  • See more stories on Insider’s business page.

Shares of Chewy jumped Wednesday after the online pet-products retailer unexpectedly swung to a fourth-quarter profit, bolstered by millions of more people last year who took on duties of caring for animals during the COVID-19 pandemic.

The company late Tuesday posted fourth-quarter earnings of $0.05 a share, compared with expectations for a loss of $0.10 a share in a survey of analysts by Refinitiv. A year earlier, Chewy posted a per-share loss of $0.15.

Sales of $2.04 billion beat Wall Street’s target of $1.96 billion as the company dealt with “surging volume”. Sales a year ago were $1.35 billion.

Chewy shares climbed by 13% to $90.95, a move that sets up the stock to trim its year-to-date loss to less than 1%. The stock price began to decelerate in early February but it’s more than doubled from about $36 over the past 12 months.

The company added 5.7 million net active customers in 2020, representing 42.7% annual growth. It also said it widened its product offerings to include gift cards, personalized items, and vet services. “Pet adoptions surged in 2020 as millions of homebound people and families sought out the comfort, companionship, and joy of pet parenthood” during the pandemic, the company said.

Chewy forecast first-quarter sales of $2.11 billion to $2.13 billion, higher than the average analyst forecast of $2.07 billion.

Wedbush analysts on Wednesday raised their price target to $100 from $90 and reiterated their outperform rating on Chewy following the company’s “solid earnings beat, above-consensus guidance, and a path to a 2021 beat and even higher long-term earnings power.”

Chewy’s cofounder and former chief executive, Ryan Cohen, is leading a turnaround effort at video game retailer and Reddit-community favorite GameStop.

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Victoria’s Secret parent L Brands jumps on revised guidance as latest stimulus boosts sales

Victoria's Secret
  • Shares of L Brands, parent of lingerie retailer Victoria’s Secret, rose by nearly 7% on Friday.
  • The company raised its first-quarter earnings view to $0.85-$1 a share from $0.55 to $0.65 a share.
  • An uptick in sales appears to be driven by stimulus payments and easing COVID-19 restrictions.
  • See more stories on Insider’s business page.

Shares of Victoria’s Secret parent company L Brands climbed Friday after lingerie retailer raised its quarterly earnings outlook, citing stimulus payments to Americans as a pillar of sales support.

L Brands now expects first-quarter earnings of $0.85-$1 per share, higher than its previous forecast of $0.55-$0.65 per share, excluding any charges related to the early extinguishment of debt. Analysts were looking for earnings of $0.62 per share, according to a survey of analysts at Yahoo Finance.

The shares tacked on 6.7% when they hit $63.40. This year, the stock has jumped nearly 60% and has risen over the past 12 months from about $12.50.

“Improved sales trends,” the company gauged, “are primarily driven by unusual shifts in consumer spending patterns, resulting from government stimulus payments, a relaxation of COVID-19 restrictions and other factors.”

The US government this month began sending out $1,400 checks to most Americans to help them deal financially with the COVID-19 health crisis. Meanwhile, more businesses have been reopening services with the vaccination of millions of people in the US against coronavirus. About 14% of the population has been fully vaccinated, according to the Centers for Disease Control and Prevention.

The company said it’s seeing stronger activity at its Victoria’s Secret chain as well as its Bath & Body Works stores.

“The environment remains uncertain, and there is no assurance that these improved trends will continue,” L Brands said.

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GameStop reports $215 million loss in fiscal 2020, misses fourth-quarter expectations

gamestop store ps5
  • After a huge year for video games, GameStop reported its Q4 and fiscal 2020 earnings on Tuesday.
  • The company missed estimates, with $5 billion in revenue and a $215 million loss for the year.
  • GameStop has struggled over the past few years as consumers increasingly turn to digital storefronts.
  • Visit the Business section of Insider for more stories.

Ailing video game retailer GameStop reported its fourth-quarter 2020 earnings on Tuesday afternoon, which also included the company’s fiscal year results ending February 1, 2021.

The company’s report came in shy of analyst expectations for the year, with $5 billion in revenue – a decrease from the previous fiscal year revenue of $6.4 billion dollars. For the fourth quarter, GameStop similarly missed expectations, with $2.1 billion in revenue.

The company lost $215 million in the 12 months ending February 1, 2021.

Here are the key numbers to watch from GameStop’s Q4/FY 2020 earnings:

  • Q4 2020 revenue: $2.1 billion. Analysts were expecting $2.2 billion.
  • FY 2020 revenue: $5.08 billion. Analysts were expecting $5.27 billion.

Despite the massive impact of the pandemic on video game sales in 2020, GameStop failed to reach analyst expectations.

“Our emphasis in 2021 will be on improving our E-Commerce and customer experience, increasing our speed of delivery, providing superior customer service and expanding our catalogue,” GameStop CEO George Sherman said in a press release.

The company previously highlighted supply constraints with new game consoles from Sony’s PlayStation and Microsoft’s Xbox as a mitigating factor.

GameStop stores “experienced unprecedented demand for recently launched gaming consoles,” the company said in January. “While consumer demand far outpaced constrained supply,” the statement said, “these products will drive sales well into 2021 as console availability from our suppliers improves later in the year.” Sony has said it expects to have a more steady supply of its wildly popular PlayStation 5 console by some time in the fall.

GameStop’s ongoing “transformation”

Before becoming a “meme stock,” GameStop was at the early stages of a “transformation” led by activist investor, board member, and Chewy cofounder Ryan Cohen. Cohen’s investment firm, RC Ventures, owns 12.9% of GameStop – making Cohen the second-largest single shareholder.

The company announced in early January that Cohen and two of his former Chewy lieutenants would become new members of the board. Pending a vote in June, the trio will make up one-third of the board’s membership.

Soon after Cohen joined the board, major c-suite changes began as part of the “transformation.”

Amazon vet Matt Francis was hired on as the CTO in early February. A former Amazon Web Services engineering lead, he’s tasked with, “overseeing e-commerce and technology functions” for GameStop.

Then, in late February, CFO Jim Bell was suddenly forced out of his role at the company. The board of directors “lost faith” in Bell, according to a person familiar with the decision who spoke with Insider. This morning, ahead of the earnings release, another executive departed the company. And on Tuesday afternoon, another former Amazon exec was added to the company’s c-suite: Jenna Owens, who previously worked for Amazon and Google.

Developing

Got a tip? Contact Insider senior correspondent Ben Gilbert via email (bgilbert@insider.com), or Twitter DM (@realbengilbert). We can keep sources anonymous. Use a non-work device to reach out. PR pitches by email only, please.

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Plug Power dives as the company says it will restate financial reports

Plug Power
A Plug Power forklift system.

  • Plug Power dropped by 15% Wednesday after the company said it will file financial restatements.
  • The restatements will cover fiscal years 2018 and 2019 and quarterly filings for 2019 and 2020.
  • The hydrogen-fuel cell company said there were accounting errors related to non-cash items.
  • See more stories on Insider’s business page.

Plug Power shares sharply dropped Wednesday after the hydrogen fuel-cell company said it will restate some of its financial reports because of accounting errors.

The company said the restatements will cover the fiscal years 2018 and 2019 and quarterly filings for 2019 and 2020. The errors related to several non-cash items including the reported book value of right-of-use assets.

Plug Power shares closed down by 7.9% at $39.33 after earlier sliding by as much as 20%. The stock in 2021 has bulked up by 16% and has advanced from about $3.30 over the past 12 months.

The company said it doesn’t expect the revisions to impact its cash position or business operations but will change how it accounts for certain transactions and items.

“The accounting related to the restatement is complex and technical and involves significant judgments in how to apply U.S. [Generally Accepted Accounting Principles], given the innovative nature of the company’s business,” in a “new and rapidly developing industry,” Plug Power said in a press release.

The company said it had discussed its fourth-quarter 2020 and preliminary year-end results with its audit committee and its auditor KMPG before their release “and at that time, no material issues were raised.” But after the release, it said that it and KPMG identified the need for restatements.

Plug Power said it will file its Form 10-K for 2020 as soon as possible as it was unable to make the March 16 deadline.

It also expects to reach its previously stated gross billings targets of $475 million in 2021, $750 million in 2022 and $1.7 billion in 2024.

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