USstocks hit fresh all-time highs last week after the third-quarter earnings season started with a bang, with both JPMorgan Chase (JPM:NYSE) and Wells Fargo (WFC:NYSE) beating consensus profit forecasts.
Heavy buying of both stocks helped push the KBW Banking Index up over 3%, with JPMorgan shares gaining 4.4% to $222.29 and Wells Fargo shares climbing 5.6% to $60.99.
JPMorgan reported total revenue of $42.65 billion against $39.87 billion in the same quarter a year ago and the consensus of $41.38 billion.
As well as buoyant investment banking revenue, the market was surprised by the resilience of net interest income given the firm had previously warned analysts not to expect a strong performance.
Earnings per share (EPS) came in at $4.37, up from $4.33 a year earlier and well ahead of the $3.98 consensus, although provisions for loan losses more than doubled due to a rise in credit card borrowing.
On the conference call, chief finance officer Jeremy Barnum once again sought to play down expectations, saying the bank’s results ‘will be somewhat challenged as normalisation continues’ over the next couple of quarters.
Barnum also commented that the bank’s earnings performance year-to-date was ‘consistent with the soft-landing narrative’.
Over at Wells Fargo, total revenue for the quarter was lower than last year and slightly below forecasts at $20.37 billion, but EPS, although lower than last year, was comfortably ahead of expectations at $1.42.
Also helping to lift the market to new highs was money manager BlackRock (BLK:NYSE), whose shares gained 3.6% to $990 after the company revealed its AUM (assets under management) had swollen to $11.5 trillion thanks to rising markets and strong customer inflows.
Assets rose 8% during the third quarter driven by $160 billion of long-term flows into low-cost ETFs (exchange-traded funds) and index products, but investors also poured more than $60 billion into cash management products.
The group’s quarterly revenue and operating income both set new records, up 15% and 26% year-over-year respectively, while its operating margin rose 350 basis points (3.5%) to 45.8%, also a new record.
On a conference call with analysts, BlackRock founder and chief executive Larry Fink said the opportunities ahead of the firm ‘have never been better’, adding he expected momentum ‘to further build to year’s end and into 2025’.
Fink also observed many investors have large cash holdings, with money market industry assets hitting new records in the quarter, including BlackRock’s own cash position, and predicted investors would ‘have to re-risk to meet their long-term return needs’, suggesting the market rally could continue.
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