Wells Fargo (WFC) came out with quarterly earnings of $1.73 per share, beating the Zacks Consensus Estimate of $1.55 per share. This compares to earnings of $1.52 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +11.61%. A quarter ago, it was expected that this biggest U.S. mortgage lender would post earnings of $1.41 per share when it actually produced earnings of $1.54, delivering a surprise of +9.22%.Over the last four quart ...

Market Overview - The US and China are experiencing escalating tensions, with recent sanctions imposed by China on a US shipbuilding company, which they consider a security risk [5][6] - The US is also implementing shipping fees, with exceptions for ships made in China [6] - Market reactions include a strong day for the S&P 500, recovering some losses from previous drops, but uncertainty remains regarding future movements [3][4] Earnings Reports - JP Morgan Chase reported revenues of $47.12 billion, exceeding expectations of $45.4 billion, with adjusted earnings per share at $5.7, surpassing the forecast of $4.84 [9][10] - Trading revenue for JP Morgan reached a record $8.9 billion, benefiting from market volatility and favorable trade policies [10] - Wells Fargo's Q3 net income was $5.59 billion, or $1.66 per share, beating expectations of $1.55 per share, although net interest income slightly missed at $11.95 billion against a forecast of $12.01 billion [14][15] - Wells Fargo's non-interest income increased by 9.3% year-over-year, and they are involved in M&A activities, advising on a $72 billion acquisition [16][17] Market Sentiment and Technical Analysis - The market is closely monitoring US-China relations, which may overshadow bank earnings in terms of investor focus [18] - Key resistance levels for the S&P 500 are identified at 6,665, with support at 6,550, and the VIX indicates a potential move of around 1.3% [19][20] - Technical traders are advised to watch the 20-day moving average as a critical indicator for market direction [20]

Core Viewpoint - The Q3 earnings season for U.S. stocks has commenced, with major financial institutions like JPMorgan Chase and Wells Fargo reporting strong performance, which is crucial amid economic uncertainties and geopolitical tensions [1] Group 1: Wells Fargo Performance - Wells Fargo has raised its medium-term target for Return on Tangible Common Equity (ROTCE) to 17%-18%, up from the previous target of 15%, indicating a positive outlook for profitability [2][5] - The bank's net interest income for Q3 was $11.95 billion, slightly below the analyst expectation of $12.01 billion, but the ROTCE adjustment has led to a positive market reaction, with shares rising over 3% [2][6] - The bank plans to lower its Common Equity Tier 1 (CET1) capital ratio target from above 11% to a range of 10%-10.5%, aiming to create more room for growth [2][5] Group 2: Investment Banking and Non-Interest Income - Wells Fargo's investment banking fees totaled approximately $840 million in Q3, reflecting a 25% year-over-year increase, driven by a surge in merger and acquisition activity [6][7] - Non-interest income, supported by credit card and wealth management services, reached about $9.49 billion, a 9.3% increase compared to analyst expectations of $9.09 billion [7] - The bank has not observed significant deterioration in consumer and commercial credit quality, with loan write-offs totaling approximately $954 million, below the analyst forecast of $1.09 billion [7] Group 3: Management and Strategic Outlook - CEO Charlie Scharf expressed optimism about the bank's strategic progress and financial performance improvements, emphasizing a clearer path for future growth [5][6] - The bank's strong profitability is highlighted by its position as the fourth-largest lender in the U.S., with a ROTCE of 21% reported by JPMorgan in Q2, while Bank of America and Citigroup reported lower ROTCE figures [5][6]

Market Overview - US stock index futures are all down, with Dow futures down 0.54%, S&P 500 futures down 0.85%, and Nasdaq futures down 1.11% [1] - European indices also show declines, with Germany's DAX down 1.07%, UK's FTSE 100 down 0.31%, France's CAC40 down 0.89%, and the Euro Stoxx 50 down 0.94% [2][3] - WTI crude oil prices fell by 1.98% to $58.31 per barrel, while Brent crude oil dropped by 1.86% to $62.14 per barrel [4] Economic Events - Federal Reserve Chairman Jerome Powell is scheduled to speak on "Economic Outlook and Monetary Policy," which may influence market expectations regarding interest rate cuts and overall monetary policy [5] Company Earnings and Performance - Morgan Stanley reported Q3 trading and investment banking performance exceeding expectations, with GAAP EPS of $5.07 and revenue of $47.1 billion, up $1.53 billion year-over-year [7] - Ericsson's Q3 profit doubled despite a 9% decline in sales, with adjusted EBIT reaching 15.5 billion SEK (approximately $1.62 billion), exceeding analyst expectations [8] - BlackRock attracted $205 billion in Q3, reaching a record asset management size of $13.46 trillion, driven by strong inflows into ETFs [9] - Johnson & Johnson raised its full-year sales forecast, reporting Q3 revenue of $24 billion, a 6.7% increase year-over-year, and plans to spin off its orthopedic business [10] - Goldman Sachs achieved record Q3 revenue of $15.18 billion, a 20% year-over-year increase, with investment banking fees significantly surpassing expectations [11] - Wells Fargo reported Q3 net interest income of $11.95 billion, slightly below expectations, but investment banking fees rose 25% year-over-year [12] Legal and Regulatory Issues - Microsoft faces a consumer class-action lawsuit alleging it engaged in a secret agreement with OpenAI to monopolize computing power, resulting in inflated prices for ChatGPT [13] Technological Developments - Nvidia launched a compact AI supercomputer, potentially creating a new growth point for its performance and impacting the AI computing industry positively [14]

Joining us now, uh, Stephanie Link, High Tower Chief Investment Officer and a CNBC contributor. And anything you you tell us today, Steph, we'll just point out, you know, the Dow's down, actually, it's improved a little, was down almost 400, down almost 300 now. So, any of the moves in the banks may or may not reflect uh the company specifics with with earnings.So, just tell us what you thought of of JP Morgan and Wells at this point. Yeah, and Leslie did a great job in terms of summarizing. Um I think that ...

Company Performance - Wells Fargo's stock initially fell due to disappointing net interest income, but they raised their fourth quarter net interest income guidance, maintaining full-year guidance at $47.7 billion despite higher expenses [2][3] - JP Morgan reported a strong quarter with investment banking fees up 17%, trading up 24%, equities up 33%, and deal-making fees up 16%, although the stock is considered expensive at 2.5 times book value [4][6] Market Trends - The asset cap lift for Wells Fargo is crucial for regaining lost market share, which was down 20% since 2017, and is expected to enhance profitability and market share as they invest in their business [3][6] - The current market environment is compared to 1999 rather than 1929, indicating a different economic landscape and potential for growth [8][10] Regulatory Environment - Deregulation is anticipated to create new growth opportunities for banks, with expectations that Basel 3 capital requirements will be adjusted, allowing banks to utilize excess capital for stock buybacks, dividends, and lending [11][12] - The capital requirements for banks are viewed as stronger now, with lessons learned from past financial crises influencing current regulations [13][15]

Earnings Overview - The third quarter earnings season has commenced with major Wall Street banks reporting their results, with analysts expecting a 7.9% increase in earnings per share for S&P 500 companies, marking the ninth consecutive quarter of positive earnings growth but a slowdown from the 12% growth in Q2 [1][16] - Initial earnings reports from JPMorgan Chase, Goldman Sachs, Wells Fargo, Citigroup, and BlackRock are anticipated, followed by Bank of America, Morgan Stanley, and others [2][4] Company-Specific Highlights - Johnson & Johnson announced plans to spin off its orthopedics unit, DePuy Synthes, while reporting adjusted earnings per share of $2.80, exceeding estimates of $2.76. Pharmaceutical sales rose 6.8% to $15.56 billion, and medical device sales also increased by 6.8% to $8.43 billion [7][8][9] - JPMorgan Chase reported a significant increase in its markets performance, with Markets & Securities Services revenue reaching $10.4 billion, up 24%, and Equity Markets revenue at $3.3 billion, up 33% [11] - Wells Fargo's third quarter results surpassed analysts' expectations, leading to a stock increase of over 2% in premarket trading [12] - BlackRock reported a substantial inflow of $205 billion in private assets, indicating strong demand in the asset management sector [13] - Ericsson's shares rose by 14% after the company beat quarterly earnings forecasts and downplayed the impact of US tariffs [14] Market Expectations - Analysts have revised S&P 500 earnings growth estimates upward to 8% for Q3, with expectations of actual growth potentially reaching double digits, estimated at 13% based on historical performance [16][17][18]

Earnings Overview - The third quarter earnings season has commenced with major Wall Street banks reporting their results, with analysts expecting a 7.9% increase in earnings per share for S&P 500 companies, marking the ninth consecutive quarter of positive earnings growth but a slowdown from the 12% growth in Q2 [1][10] - Major financial institutions including JPMorgan Chase, Goldman Sachs, Wells Fargo, Citigroup, and BlackRock are among the first to report their earnings [2] Company-Specific Highlights - Wells Fargo reported third quarter results that exceeded analysts' expectations, resulting in a stock increase of over 2% in premarket trading [4] - JPMorgan Chase's profits rose in the third quarter, although its stock experienced a slight decline following the earnings report [6] - BlackRock reported a significant inflow of $205 billion in private assets, indicating strong performance in that segment [7] - Ericsson's shares surged by 14% after the company beat quarterly earnings forecasts and downplayed the impact of US tariffs [8] Earnings Forecasts and Trends - Analysts have been revising their earnings per share estimates upward, with the current estimated year-over-year earnings growth rate for the S&P 500 at 8%, an increase from the previous estimate of 7.3% [10] - Historical data shows that S&P 500 companies have surpassed earnings estimates in 37 of the last 40 quarters, suggesting a likelihood of positive surprises in the current earnings season [11][12]

Summary of Key Points Core Viewpoint - Wells Fargo has raised its expectations for 2025 noninterest expenses to approximately $54.6 billion, an increase from the previous guidance of about $54.2 billion [1] Group 1: Expense Changes - The increase in noninterest expenses is attributed to higher severance expenses of around $200 million and increased revenue-related compensation expenses of approximately $200 million [2] - The revenue-related compensation expenses are primarily driven by the strong performance of the company's wealth and investment management unit, benefiting from favorable stock market conditions [2] Group 2: Net Interest Income Guidance - Wells Fargo has maintained its guidance for 2025 net interest income (NII) to be roughly in line with the 2024 NII of $47.7 billion [3] - NII is a critical performance metric for banks, reflecting the difference between interest paid on deposits and interest earned on interest-bearing assets [3]

Core Insights - Wells Fargo reported a provision for credit losses of $681 million for Q3, a decrease from over $1 billion in both Q2 2025 and Q3 2024 [1][2] - The reduction in provision for credit losses is attributed to improved credit performance and lower commercial real estate loan balances, although this was partially offset by increases in commercial and industrial, auto, and credit card loan balances [2] - Net charge-offs for Q3 were $954 million, down from $997 million in Q2 and $1.1 billion in Q3 2024 [2]