Earnings Beat Expectations but Cancel Out
Tuesday brought the first sizable wave of summer earnings from American corporations, and while most beat what analysts had projected, the results largely neutralized one another, keeping the major indexes close to their records and little changed. The S&P 500 dipped 0.1%, drifting slightly further below the all-time peak it reached last week. As of 10:45 a.m. Eastern time, the Dow Jones Industrial Average had lost 5 points, under 0.1%, and the Nasdaq composite was 0.1% lower. Those small headline numbers hid substantial movement beneath the surface.[S1][S2]
Goldman Sachs jumped more than 4% at the opening bell after reporting a profit for July through September that blew past analysts' expectations, but the stock quickly gave up all of that gain and dipped to a modest loss before recovering to a gain of 1.2%. The bank benefited from strong growth in its business that lends to clients for trading stocks, among other activities, even as CEO David Solomon said it faces a complicated operating environment created by considerable uncertainty.[S1]
Wall Street is anticipating a lot from corporate profits. FactSet data indicates analysts project S&P 500 companies will post growth of almost 30% for the summer versus the same period a year ago. Should that materialize, it would be the third straight quarter with gains exceeding 25%. To support stock prices that sit at records, companies must deliver on those lofty figures, even as investors weigh numerous concerns including elevated inflation, mounting pressure from the bond market and the conflict with Iran.[S1]
Healthcare and Bank Results Diverge
Shares of UnitedHealth Group moved dramatically despite the health insurer beating analyst estimates on both profit and revenue for the quarter and lifting its projection for full-year 2026 earnings. The stock climbed as much as 5.6% right after the opening bell, then gave back the entire advance and finished down 0.3%. Wells Fargo had a rougher session, sliding 1.9% after its quarterly revenue came in below what analysts had forecast. CEO Charlie Scharf pointed to softer revenue from venture capital investments, among other factors, as the cause.[S1]
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Scharf added that the bank's own data indicates its consumer and business clients remain in solid shape, even with economic uncertainty and recent surveys revealing how downbeat Americans feel about their finances. That could be a positive signal for the wider economy and for future earnings across sectors. Jamie Dimon, CEO of JPMorgan Chase, the nation's largest bank, flagged lofty asset prices as one possible economic danger, alongside high inflation, climbing interest rates and geopolitical tensions. He described these forces as perhaps manageable while saying the bank stays ready for many possible outcomes. JPMorgan Chase shares gained 0.6% after alternating between gains and losses earlier in the day. The bank posted a quarterly profit below analyst expectations but issued a forecast for current-quarter net interest income that exceeded Wall Street's projection.[S1]
Chip Stocks Slide on China Competition Fears
Beyond the earnings news, computer chip shares saw some of the day's most dramatic moves. Anxiety has lingered for some time over whether chip valuations have climbed too far amid the artificial-intelligence boom, and it intensified after reports that CXMT, a Chinese memory chipmaker, is making strides that might threaten major players such as Boise, Idaho-based Micron Technology, plus Samsung Electronics and SK Hynix of South Korea. Micron dropped 4.6%, weighing most heavily on the S&P 500. South Korea's Kospi index plunged 5.5%.[S1]
Over in the bond market, Treasury yields declined as oil prices retreated. The 10-year Treasury yield fell to 5.22% from 5.24% at Friday's close. U.S. bond trading was shut Monday for a holiday. Yields dropped after Brent crude lost 0.8%, settling at $105.86 a barrel. Crude prices have been swinging back and forth amid uncertainty over when the conflict with Iran will let the global energy sector get back to normal.[S1]
