MV Weather Report: Goldman's Earnings Partly Cloudy
Rain or shine, we review the day's biggest stock stories.
Goldman Sachs (GS) was the story of the day as the company reported its third quarter earnings results before the bell.
The company reported EPS of $5.25 vs. $4.24 consensus estimates; on revenues of $12.37 bln vs.$11.02 consensus estimates. The biggest knock on Goldman's quarter was that Fixed Income, Currency, and Commodities came in at $5.99 bln which was down from $6.8 bln in the second quarter.
Goldman Sachs sold off on the news, closing down -1.90% to $188.63. It was a classic "sell the news" type of reaction as the quarter was good as expected.
The S&P 500 sold off on the news before recovering and closing up 0.42% to 1096, a new year to date high for the index
Today on the Buzz and Banter, Professor Jeff Macke gave his opinion on the Goldman quarter and earnings season in general.
"Even if I'm wrong take a look at Goldman today. The Bank That Controls the World boot-stomped estimates today yet gapped lower at the opening bell. Intel (INTC) crushed their numbers (62% margins? Anything out of the 50's is great for INTC) but has actually been outperformed both yesterday and today by Best Buy (BBY). Best Buy sells computers but they also sell a ton of dated video games and aisles full of movies which no one actually buys anymore. Best Buy started pulling away from Intel about noon yesterday and has increased the spread since by saying not much of anything.
"While we're looking, check out Johnson Controls (JCI), the last man standing in green batteries for cars. A bump in estimates has only been good for 2%.
"The moves in the earnings winners has been okay but no where near what could have been expected. What does that mean? From here it looks a lot like good news being "in" the stocks, which would make sense, given the size of the moves. Bigger picture we could be entering the bullish Ying of last March's bearish Yang. In March, if you were staying short it paid to question what, exactly, you were waiting for in terms of bad news. If you're long JCI from 8 and change, Goldman from $50 and Intel from $12 6-months ago the questions has to be asked: What, precisely, do you expect to happen that will drive the stocks higher in the near term?"
Tomorrow investors will get more market moving news when Bank of America (BAC) reports third quarter earnings as well as General Electric (GE).
Analysts are looking for BofA to report a loss of $0.07 per share on revenues of $27.7 bln. Investors will be looking for improvement in credit deterioration and any potential clues on who will replace retiring CEO Ken Lewis at the end of the year.
Also out before the bell are Long Term TIC Flows, Capacity Utilization, Industrial Production and Michigan Sentiment which is due at 9:55.
Finally, a quick check of late night earnings shows Google (GOOG) trading higher and IBM (IBM) moving lower.
Have a great night!
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