Investors were worried that rising prices could remain a problem for the US economy. Treasury yields also went up, putting pressure on the stock market. US stock futures fell on Wednesday as inflation in September was higher than expected.
Bank of America stock falls after Q3 earnings report
The stock declined around 3% in one update and was down 6% in earlier premarket trading. The bank reported earnings of 91 cents per share, compared with the $1.10 expected in the provided report, while revenue came in at $30 billion against expectations of $30.69 billion. Bank of America also faced more than $1.2 billion in federal penalties. Regulators said the bank had failed to report more than $5 billion in suspicious transactions. The bank earned $3.03 per share and made $20.34 billion in revenue. Analysts surveyed by LSEG had expected earnings of $2.91 per share and revenue of $19.95 billion. Even after beating both estimates, the stock fell around 1% to 2%, according to CNBC. It made $5.79 billion in revenue, more than $900 million above the estimate from StreetAccount.
Bank of America shares fell after the bank reported its third-quarter results. The penalties were announced a day before its earnings report. Morgan Stanley reported better-than-expected results for the third quarter, but its shares still fell.
Morgan Stanley’s stock trading business performed especially well. The September inflation report has become a key concern for US stock investors. Investors are now weighing inflation risks against corporate earnings growth as the third-quarter reporting season continues.
However, the strong performance was not enough to stop the bank’s shares from falling before the market opened. Inflation came in above expectations on an annual basis, Treasury yields rose, and several major bank and chip stocks declined before the market opened.
Marta Norton, chief investment strategist at Empower, told CNBC that the business fundamentals for chips remained strong. Big bank earnings have struggled to lift stock prices despite strong quarterly results. The market reaction suggests investors are demanding stronger results and better future outlooks from companies this earnings season. Strong demand for chips has supported the sector, but investors are questioning whether stock prices have risen too far. However, she questioned how much further semiconductor valuations could rise.
Goldman Sachs and Citigroup shares also ended lower on Tuesday, even after several major banks reported strong results.
