Stocks Drop as Wells Fargo, JPMorgan Fail to Impress

By Minyanville Staff  OCT 12, 2012 4:50 PM

Today's financial recap and Monday's outlook.

 


MINYANVILLE ORIGINAL Stocks took a breather on Friday as we saw mixed earnings results from two major financial institutions.

Wells Fargo (NYSE:WFC), the nation's largest mortgage provider, reported better-than-expected earnings. However, its net interest margin was lower than expected, as was the profitability of its mortgage business, resulting in a decline in the stock of nearly 3%.

JPMorgan (NYSE:JPM) also traded down after beating on both the top and bottom lines, possibly due to disappointment on its own net interest margin line.

However, keep in mind that financials have been the best performing sector in the S&P 500 (INDEXSP:.INX) this year, and that the housing market has improved in recent months, raising earnings expectations for these two names.

In economic news, September PPI was reported at 1.1% versus a consensus forecast of 0.8%. Core PPI, however, was flat while economists were expecting a 0.2% gain.

Additionally, October consumer sentiment came in above consensus estimates at 83.1, which gave the market a boost in early going.

However, the risk-off trade that dominated the action this week subsequently took hold, and we saw notable weaknesses in small caps, cyclicals, and the aforementioned financials.

The Nasdaq (INDEXNASDAQ:.IXIC) showed relative strength, but only because Apple (NASDAQ:AAPL), which accounts for about one-fifth of the index, was in positive territory.

Monday's Financial Outlook

On Monday, we will see three economic data releases: August business inventories, September retail sales, and the October Empire Manufacturing Index.

We will also see earnings reports from Citigroup (NYSE:C), Charles Schwab (NYSE:SCHW), and Gannett (NYSE:GCI), among others.

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