U.S. stock index futures extended falls on Friday, as quarterly results from some major U.S. banks added to concerns that the Federal Reserve's aggressive monetary policy tightening has started taking a toll on economic growth.
Market Snapshot
At 8:00 a.m. ET, Dow e-minis were down 242 points, or 0.71%, S&P 500 e-minis were down 34 points, or 0.85%, and Nasdaq 100 e-minis were down 117.75 points, or 1.02%.
Pre-Market Movers
JPMorgan— The bank reportedfourth-quarter earnings and revenuebefore the bell that topped Wall Street expectations. However, it said a mild recession is now the “central case.” JPMorgan slid nearly 3% in permarket trading.
Lockheed Martin— Goldman Sachsdowngraded the defense contractorto sell from neutral and cut its price target by $56 to $332. The Wall Street firm noted that the company is vulnerable to any changes in government budgets. Lockheed Martin tumbled more than 3% in the premarket.
Virgin Galactic Holdings— The space tourism company surged nearly 16% after it said it was on track for a commercial launch in the second quarter of 2023.
Wells Fargo— The bank slid nearly 4% after reporting shrinking profits, weighted down by a recent settlement and the need to build-up reserves.
Delta Air Lines— The airlinereported fourth quarter profit and revenuebefore the bell that beat expectations. Its adjusted earnings per share came in at $1.48 versus a Refinitiv estimate of $1.33. Delta was down 4.5% in premarket trading.
American Airlines— A day after gaining nearly 10% on anearnings beat, the airline was down about 2% in the premarket.
Tesla— The electric-vehicle maker slid over 6% in the premarket after it was downgraded by Guggenheimto sell from neutral over concerns with Tesla’s fourth-quarter estimates. Tesla alsocut pricesin the U.S. and Europe again, according to listings on the company’s website Thursday night. The stock lost 65% in 2022.
Bank of America- The bankreportedearnings per share of 85 cents last quarter, above the 77 cents a share expected by analysts, per Refinitiv. Revenue also beat expectations. However the bank’s net interest income fell slightly below expectations despite jumping interest rates. Bank of America was down 2.8% early trading.
Salesforce— The software company slid 1.4% in the premarket after being downgraded by Atlantic Equities to neutral from overweight. The Wall Street firm cited execution concerns, management exodus and slower-than-expected revenue growth.
Caterpillar— Bank of Americaupgraded Caterpillar to buyfrom neutral, saying the company has an underappreciated roadmap that can drive outperformance. Caterpillar was relatively flat in the premarket.
Logitech International-- The keyboard and mouse maker continued to slide in the premarket, down nearly 5%. The move comes a day after Logitech lost 16% on the announcement that preliminary results showed declining sales and earnings. Deutsche Bankdowngraded the sharesFriday.
Market News
Tesla extends price cuts to U.S., Europe to drive demand
Tesla has slashed prices on its electric vehicles in the United States and Europe, the automaker's website shows, extending a new strategy of aggressive discounting after missing Wall Street estimates for deliveries.
The U.S. price cuts, announced late Thursday in U.S. time on the Model 3 sedan and Model Y crossover SUV, ranged between 6% and 20% compared with prices before the discount, according to Reuters calculations.
JPMorgan tops estimates for fourth-quarter revenue, but says mild recession is now ‘central case’
JP Morgan Chase & Co. said Friday it had net income of $11.0 billion, or $3.57 a share, in the fourth quarter, up from $10.4 billion, or $3.33 a share, in the year-earlier period. Revenue rose to $34.547 billion from $29.257 billion a year ago. The FactSet consensus was for EPS of $3.08 and revenue of $34.353 billion.
Net interest income rose 48% to $20.3 billion. Noninterest revenue fell 8% to $15.3 billion, driven by lower investment banking fees amid a dearth of deals, lower management and performance fees in AWM, lower operating lease income in auto and lower net production revenue in home lending amid higher interest rates.
BofA profit beats estimates as higher rates bolster interest income
Bank of America Corp (BAC.N) reported a bigger-than-expected fourth-quarter profit on Friday, helped by a surge in net interest income as the U.S. Federal Reserve raised rates through most of last year.
The 'higher-for-longer' rate environment to battle decades-high inflation has underpinned profits at consumer banks, with analysts expecting those gains to peak in 2023 and help offset sluggish dealmaking as well as bigger loan loss provisions.
Goldman lost $1.2 billion in just nine months in newest division
Three months after Goldman Sachs Group Inc. carved out a new division to house what’s left of its once-ambitious foray on Main Street, it’s giving shareholders a clearer look at those financials.
The collection of businesses — including Goldman’s Apple Card — now packaged into the segment dubbed Platform Solutions racked up more than $1.2 billion in pretax losses in last year’s first nine months, with the drop accelerating every quarter.