U.S. markets primarily focused on the earnings season as banks kicked off the week. On Monday, markets remained relatively flat as investors continued to remain skeptical of a potential trade agreement between the U.S. and China. On Tuesday, the Dow Jones Industrial Average soared by over 300 points or 1.2% after upbeat earnings by JPMorgan Chase, Wells Fargo, Citigroup, UnitedHealth, and Johnson & Johnson. While most of the banks reported better-than-expected quarterly financial results, Goldman Sachs lagged behind after reporting disappointing quarterly results. Despite Goldman Sachs' performance, the Dow Jones closed at a 3-week high. On Wednesday, markets were dragged lower on weaker-than-expected retail sales, which fell by 0.3% in the past month, ending a streak of six straight consecutive gains, according to MarketWatch. However, throughout Wednesday, markets rebounded due to Bank of America's better-than-expected financial results. Additionally, the market was also driven by Netflix as investors waited for its results during aftermarket hours. On Thursday, the Dow Jones rose by over 100 points, primarily led by Netflix gains and a potential Brexit deal between the U.K and the European Union. The tentative Brexit deal must still be approved by the U.K parliament and other EU member states. British Prime Minister Boris Johnson has called for a U.K. parliamentary vote on Saturday, according to MarketWatch. JPMorgan Chase & Co. (NYSE: JPM), UnitedHealth Group Incorporated (NYSE: UNH), Bank of America Corporation (NYSE: BAC), Netflix, Inc. (NASDAQ: NFLX), International Business Machines Corporation (NYSE: IBM)
While most of the banks surpassed analysts' estimates, earnings for the S&P 500 are expected to decline by 4.6% for the third quarter, according to CNBC, citing FactSet. Nonetheless, investors continue to remain optimistic after an upbeat week to start the earnings season. Next week, investors will focus on quarterly financial results from Snap, McDonald's, AT&T, Boeing, AT&T, Twitter, Visa, and Verizon. "Even though it is very early in the Q3 earnings reporting period, investors have been encouraged by the better-than-expected results for the large diversified banks and selected health care companies," said Sam Stovall, Chief Investment Strategist at CFRA, in a note, according to MarketWatch.
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JPMorgan Chase & Co. (NYSE: JPM) shares increased by 4% on Tuesday after reporting stronger-than-expected results. The bank reported third-quarter earnings of USD 2.68 per share on revenues of USD 30.1 Billion. Analysts expected earnings of USD 2.45 per share on revenues of USD 28.5 Billion. Both earnings and revenues increased by 8% year-over-year, largely due to growth in home loans, auto, and credit cards.
UnitedHealth Group Incorporated (NYSE: UNH) reported its third-quarter financial results before the market open on Tuesday. The healthcare provider topped analysts' estimates, which sent shares 6% higher shortly after the opening bell. For the third quarter, UnitedHealth reported earnings of USD 3.88 per share on revenues of USD 60.4 Billion. Analysts anticipated earnings of USD 3.75 per share on revenues of USD 59.8 Billion. Revenues for the quarter grew by 6.7% year-over-year, primarily led by the double-digit percentage growth in UnitedHealth's Optum segment. Revenues for Optum grew by 13.3% to USD 28.8 Billion at the end of the quarter. OptumHealth reported revenues of USD 8.1 Billion, representing a 34.4% increase year-over-year. OptumRx reported revenues of USD 18.5 Billion, increasing by 5.8% year-over-year.
Bank of America Corporation (NYSE: BAC) shares edged higher by 3% after reporting stronger-than-expected quarterly results. The bank reported earnings of USD 0.56 per share, surpassing estimates of USD 0.51 per share. The reported earnings include a USD 2.1 Billion charge related to its partnership with First Data. Average loan and lease balances in business segments rose to USD 923 Billion, increasing by 6% year-over-year. Consumer and commercial loans each increased by 6%. Average deposit balances increased to USD 1.4 Trillion, representing a 4% increase year-over-year
Netflix, Inc. (NASDAQ: NFLX) shares rose by 11% during extended trading hours on Wednesday after topping analysts' estimates for earnings and international subscribers. For the quarter, Netflix reported earnings of USD 1.47 per share on revenues of USD 5.24 Billion. The Company surpassed analysts' earnings estimates of USD 1.04 per share, however, fell short of revenue estimates of USD 5.25 Billion. At the end of the quarter, Netflix reported domestic paid subscriber additions of 517,000 compared to FactSet estimates of 802,000. Meanwhile, Netflix added 6.26 million international paid subscribers versus estimates of 6.05 million. Average streaming paid memberships and ARPU grew by 22% and 9% year-over-year, respectively.
International Business Machines Corporation (NYSE: IBM) reported its third quarter financial results during aftermarket hours on Wednesday. Shares fell by 6% on Thursday morning after reporting weaker-than-expected revenue. For the quarter, IBM reported earnings of USD 2.68 per share on revenue of USD 18.03 Billion. Analysts expected earnings of USD 2.67 per share on revenue of USD 18.22 Billion. IBM has now reported five consecutive quarters of declining revenues, even though Red Hat reported a 20% growth in revenue at the end of the quarter. IBM's slump is primarily attributable to its Global Technology Services segment, which includes its technology support service, infrastructure, and cloud services. The segment reported revenues of USD 6.7 Billion, decreasing by 5.6% year-over-year.
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