Stock Market Today Mid-Morning Updates
On Wednesday, the Dow Jones Industrial Average is up by 120 points Morgan Stanley (NYSE: MS) and Bank of America (NYSE: BAC) reported impressive earnings. This comes as a relief after a broad sell-off yesterday, as investors continue to digest higher 10-year Treasury yields topping 1.9% on early Wednesday. Rising bond yields to the highest in 2 years hammered tech stocks again yesterday sending the Nasdaq to its lowest closing in three months, at 2.6%.
Today, UnitedHealth (NYSE: UNH), a Dow component, also reported strong fourth-quarter and full-year financials. Full-year revenue was $287.6 billion, growing by 12% year-over-year. The company saw double-digit growth at both Optum and UnitedHealthcare. Net earnings for the full year were $18.08 per share. “Our strong 2021 performance and confident growth outlook for 2022 and beyond reflect the accelerating innovation and expanding capabilities across Optum and UnitedHealthcare,” said Andrew Witty, chief executive officer of UnitedHealth Group.
Among the Dow Jones leaders, shares of Apple (NASDAQ: AAPL) are up by 0.28% today while Microsoft (NASDAQ: MSFT) is also up by 1.16%. Home Depot (NYSE: HD) and Nike (NYSE: NKE) ticked higher at 0.23% and 0.97% respectively on Wednesday. However, among the Dow 30, financial leaders like Visa (NYSE: V) and JPMorgan Chase (NYSE: JPM) are trading lower.
Shares of electric vehicle (EV) leader Tesla (NASDAQ: TSLA) are is up 1.93% on Wednesday. Rival EV companies like Rivian (NASDAQ: RIVN) and Lucid Group (NASDAQ: LCID) are also up by 3.85% and 3.82% today. Chinese EV leaders like Li Auto (NASDAQ: LI) and Xpeng Motors (NYSE: XPEV) are trading lower at 1.44% and 2.15% respectively.
Dow Jones Today: Treasury Yields Continue To Stay At Pandemic Era Highs
Following the stock market opening on Wednesday, the S&P 500, Dow Jones, and Nasdaq are trading 0.69%, 0.43%, and 0.90% higher. Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (NASDAQ: QQQ) is up by 0.73% on Wednesday, while the SPDR S&P 500 ETF (NYSEARCA: SPY) is up by 0.55%.
Today, the yield on the benchmark 10-year Treasury note was trading at 1.856%. With persistent inflation and by extension interest rate hikes around the corner, investors could be on the defensive. This is evident by yesterday’s sell-off. Though Fed officials are now in a blackout period before their meeting next week, policymakers are painting a picture that they are gearing up to raise interest rates and eventually draw down on the Fed’s balance.
Banks are also likely embracing the era of higher interest rates. This comes as they pivot away from the profitability of capital markets businesses in favor of greater net interest income in loan portfolios. While rising rates are typically good for the financial sector, this could also be a double-edged sword as big banks report disappointing earnings due to higher costs. This can be seen by Goldman Sachs’ (NYSE: GS) missed earnings yesterday.
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Sofi Stock Surges On Key Regulatory Win
SoFi Technologies (NASDAQ: SOFI) is among the key names making headlines in the stock market today. Notably, this is thanks to the company’s latest breakthrough in the regulatory space. In detail, SoFi received approval from both the Office of Comptroller of the Currency and the Federal Reserve. This approval allows SoFi to become a national bank. In particular, the approval is for an application to become a bank holding company through the acquisition of Golden Pacific Bancorp. As you can imagine, all of this would be a significant win for SoFi. Accordingly, investors appear to be well aware of this too.
Evidently, SOFI stock is currently surging by a whopping 19% as of today’s opening bell. Providing insight into all of this is SoFi CEO, Anthony Noto. Noto highlights, “With a national bank charter, not only will we be able to lend at even more competitive interest rates and provide our members with high-yielding interest in checking and savings, it will also enhance our financial products and services to ensure they efficiently meet the needs of our members, business partners, and communities across the country, while continuing to uphold a high bar of regulatory standards and compliance.” By and large, SoFi appears to be firing on all cylinders now and investors seem to be jumping on.
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BofA And Morgan Stanley Jump On Better-Than-Expected Quarterly Figures
In other financial sector news, two more big banks reported their latest quarterly earnings figures today. Unlike yesterday, Bank of America (BofA) and Morgan Stanley (MS) topped estimates in their latest earnings calls. For starters, BofA posted an earnings per share of $0.82 on revenue of $22.17 billion for the quarter. In terms of earnings, the bank beat consensus estimates of $0.76 a share. Additionally, BofA also saw its fourth-quarter profit increase by 28% year-over-year. This adds up to a whopping $7.01 billion.
According to the firm, a key contributor to its current performance would be improving credit quality. The likes of which are allowing BofA to release $851 million in pandemic loan loss reserves and book an almost half a billion-dollar benefit after charge-offs of $362 million. Moreover, BofA states that this is the lowest loss rate for loans over the past 50 years. As it stands, BAC stock is currently trading higher by 4.15% today.
Following that, MS reported earnings of $2.01 per share on revenue of $14.52 billion in its latest quarterly update. To highlight, the company topped earnings projections of $1.91 but fell shy of revenue estimates of $14.6 billion. Even so, CEO James Gorman notes that MS posted record revenues for the fiscal year. Gorman cites notable performances across the firm’s core business segments as driving factors for the year. Testament to this is MS’s Wealth Management division, growing client assets by almost $1 trillion throughout the fiscal year. Because of all this, MS stock is currently up by 1.85% today.
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