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Tuesday May 23, 2017
JP Morgan Reports Strong First Quarter
JPMorgan Chase & Co. (JPM) announced its quarterly earnings on Thursday, April 13. The nation's leading bank beat revenue and earnings expectations in the first quarter.
JPMorgan reported revenue of $25.59 billion in the first quarter. Last year, revenue in the first quarter came in at $24.08 billion.
"We are off to a good start for the year with all of our businesses performing well and building on their momentum from last year," said JPMorgan CEO Jamie Dimon. "The consumer businesses continue to grow core loans at double digits, outperform the industry in deposit growth, and we once again had very strong card sales volume growth this quarter – reflecting our commitment to providing our customers the innovative products and services they want."
JPMorgan reported $6.45 billion in net income for the first quarter, up 17% from $5.52 billion a year ago. On an adjusted earnings per share basis, the company reported profit of $1.65 per share, beating analysts' earnings predictions of $1.52 per share.
Following the earnings release on Thursday, JPMorgan shares were up 1.6% to $86.73 in early trading. In the first quarter, the bank experienced an 11% growth in loan activity and a 15% boost in credit card sales, a positive sign that customers are taking on more debt as the economy expands. In Thursday's earnings release, Dimon seemed optimistic about the current economic environment, stating that, "U.S. consumers and businesses are healthy overall and with pro-growth initiatives and improving collaboration between government and business, the U.S. economy can continue to improve."
JPMorgan Chase & Co. (JPM) shares ended the week at $84.40 on 04/13, down 2% for the week.
Delta Flies Past Profit Expectations
Delta Air Lines, Inc. (DAL) announced its first quarter earnings on Wednesday, April 12. While earnings fell sharply year-over-year, the airliner's profit surpassed Wall Street's estimates, causing shares to rise 2% shortly after earnings were released.
Delta reported quarterly revenue of $9.15 billion. This was a slight drop from last year's first quarter revenue of $9.25 billion.
"Despite fuel price pressures, the Delta people once again delivered solid results across the board, with double digit operating margins, strong improvements in customer satisfaction and progress on our international expansion with the closing of our Aeroméxico transaction," said Delta CEO Ed Bastian. "Producing these results in our toughest quarter of the year shows not only how far we've come, but also that we have more opportunity in front of us to continue building a better airline for our employees, customers, and owners."
Delta announced net earnings of $603 million, or adjusted earnings of $0.77 per share. Analysts were expecting adjusted earnings of $0.75 per share. Last year at this time, Delta reported profit of $946 million, or adjusted earnings of $1.32 per share.
The airline industry has faced harsh criticism in recent weeks. Last week, Delta was on the receiving-end of customers' frustrations after canceling more than 3,000 flights following a major storm in the Atlanta area. This week, rival United Airlines faced public outrage after it forcefully removed a passenger due to overbooking. Earlier this week, the nation's longest-running study of airline performance quality released numerical ratings of the nation's 12 leading airlines. Taking into consideration numerous factors—including on-time performance, involuntary denied boardings, mishandled bags and customer complaints—Alaska Airlines was named the best U.S. air carrier with Delta following closely behind in second.
Delta Air Lines (DAL) shares ended the week at $44.03 on 04/13, down 2% for the week.
Fastenal Keeps Continues to Build Revenue
Fastenal Company (FAST) reported quarterly earnings on Wednesday, April 12. The construction and industrial supply company saw growth in both revenue and earnings in the first quarter.
Fastenal announced revenue for the first quarter was $1.05 billion—topping the $1.03 billion in revenue that analysts predicated. Last year, revenue in the first quarter was $986.7 million.
"We are pleased with the improving pace of business growth in the first quarter of 2017," said Fastenal President and CEO Dan Florness, "This is a welcome sign of improving customer business activity and of the traction we are gaining in our growth drivers."
Fastenal reported net income of $134.2 million—an increase from last year's first quarter earnings of $126.2 million and in line with Wall Street's estimates. Earnings per share for the first quarter were $0.46, up from $0.44 per share a year ago.
Fastenal has grown from a fastener distributor to a full-line industrial and construction supplier today. The company currently operates approximately 2,500 stores in 22 countries. In the first quarter, Fastenal signed 64 new onsite locations, an increase of 33.3% from 48 signings in the same quarter last year.
Fastenal Company (FAST) shares ended the week at $45.54 on 04/13, down 10% for the week.
The Dow started the week of 04/10 at 20,668 and closed at 20,453 on 04/13. The S&P 500 started the week at 2,357 and closed at 2,329. The NASDAQ started the week at 5,883 and closed at 5,805.
Yields Rebound After Hitting Five-Month Low
Treasury yields hit a five-month low on Wednesday, April 12 following remarks made by President Trump concerning interest rates and the strength of the U.S. dollar. The statements increased the bond rally that was spurred earlier in the week after geopolitical uncertainty drove investors to safe-haven government bonds.
On Wednesday, President Trump expressed his opinion that the dollar "is getting too strong" and that he would prefer keeping interest rates low. The statements caused the yield on the 10-year Treasury note, which moves inversely to price, to fall to 2.238%. This marked the yield's lowest level since November 17.
On Thursday, yields eased away from Wednesday's lows in anticipation of the holiday weekend and as a result of a survey conducted by the University of Michigan that indicated a positive shift in consumer sentiment in early April. The dollar, which also fell sharply on Wednesday following Trump's statements, rebounded on Thursday.
"Clearly, I think (the dollar) was oversold yesterday," said Peter Ng, senior currency trader at Silicon Valley Bank in Santa Clara, California. "The market was very sensitive to headlines given how nervous it has become due to geopolitical risk."
Prior to President Trump's statements on Wednesday, yields were being driven lower earlier in the week by geopolitical fears. Political concerns involving France, North Korea and Syria came to the forefront this week, causing traders to seek out haven investments, including gold, U.S. Bonds and the Japanese Yen.
"Geopolitical risks are pronounced," said Aaron Kohli, an interest-rates strategist for BMO Capital Markets. "You've heard the saber-rattling in North Korea and from the Trump administration. That ratcheting up of global tensions has played into U.S. government bonds."
The 10-year Treasury note yield finished the week of 04/10 at 2.23%, while the 30-year Treasury note yield was 2.89%.
Mortgage Rates Hit New 2017 Low
Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, April 13. The report indicated that the 30-year fixed rate mortgage fell to its lowest point this year after four consecutive weeks of decline.
The 30-year fixed rate mortgage averaged 4.08% this week. This represents a decrease from last week when it averaged 4.10%. Last year at this time, the 30-year fixed rate mortgage averaged 3.58%.
This week, the 15-year fixed rate mortgage averaged 3.34%. This was lower than last week's average of 3.36%. The 15-year fixed rate mortgage averaged 2.86% one year ago.
"Following a weak March jobs report, the 10-year Treasury yield dropped about 5 basis points," said Sean Becketti, chief economist at Freddie Mac. "The 30-year mortgage rate fell 2 basis points to 4.08%. Not only did the average 30-year fixed-rate mortgage decline for the fourth consecutive week in our survey, it also fell to a new 2017 low."
Based on published national averages, the money market account finished the week of 04/10 at 0.75%. The 1-year CD finished at 1.32%.
Published April 14, 2017