Traders Have One-Track Mind on Bank Earnings
Numbers were fairly good from two of the world's top banks, but the stocks still sold off, writes MoneyShow's Jim Jubak, also of Jubak's Picks.
Just goes to show you—you can never predict what, in the short term, the market will latch onto.
Today, Wells Fargo (WFC) and JPMorgan Chase (JPM) reported third-quarter earnings before the New York market opened. I was expecting that the two stocks might deliver a positive surprise that might be enough to start a rally in the still-depressed financial sector.
Well, sort of.
Wells Fargo did report a slight surprise on earnings, of 88 cents a share (versus expectations for 87 cents) for the quarter. That was a 22% increase from the third quarter of 2011. Revenue, however, rose just 8% year over year, to a slightly disappointing $21.2 billion (versus expectations of $21.42 billion.)
For those investors with a slightly more long-term approach than just the recent quarter, the news was solidly good. The bank continues to take market share in the US mortgage market, where Wells Fargo accounted for one in three US mortgages at the end of June. Mortgage banking revenue climbed by 50% to $2.8 billion from the third quarter of 2011.
And the bank showed a big increase in deposits, with core checking and savings deposits up $16.9 billion from the second quarter.