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Pre-Market: Goldman Sachs Profit Declines; Citigroup Hit by Bond Losses


Best Buy shares fell by more than a quarter on poor holiday sales.

Stocks might fall today as Wall Street titans Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) both reported earnings and US unemployment claims fell.

Stock futures were lower this morning, indicating that after reaching a record high on Wednesday, the major indices are likely to decline today. Futures contracts on the Dow Jones Industrial Average (INDEXDJX:.DJI) were down 0.09% at 16,395. S&P 500 (INDEXSP:.INX) futures dropped 0.141% to 1,839.00 and Nasdaq (INDEXNASDAQ:.IXIC) futures declined by 0.01% to 3,597.75.

Goldman Sachs net income fell 19% from a year earlier to $2.33 billion, or $4.60 per share, but beat Wall Street's expectations by $0.42. The bank, which boasts the highest return on equity on Wall Street, handled more mergers and acquisitions than any global competitor during the quarter. Though competitors reported a drop in revenue from investment banking, Goldman generated $6 billion from that division last year, a 22% gain over 2012. The last quarter was marked by cost-cutting as well. Compensation and benefits expenses were 3% lower than in 2012, and its total workforce fell 2%.

"Our work in advancing our client franchise and in ensuring continued cost discipline has allowed us to provide solid returns even in a somewhat challenging environment," said CEO Lloyd Blankfein.

Goldman Sachs shares rose 0.42% to $179.50 in pre-market trading this morning.

Citigroup's net income more than doubled year-over-year in the last quarter to $1.2 billion, or $0.82 per share, excluding one-time items. However, this was $0.13 short of analyst forecasts. Profit from the bank's securities business declined by 8% and retail banking fell by 16%. Citigroup had heavy losses over the year in bond trading because the bank was much more exposed to risk stemming from the uncertainty of when the Federal Reserve would scale back quantitative easing.

"Although we didn't finish the year as strongly as we would have liked, we made substantial progress toward our key priorities in 2013. Having grown our operating net income by 15% over 2012, we achieved our highest amount of net income since before the financial crisis," said CEO Michael Corbat.

Citigroup shares fell 3.3% in the pre-market.

Best Buy Co Inc. (NYSE:BBY) shares fell 27.5% this morning after the electronics retailer disclosed that holiday-period sales fell on a yearly basis. Revenue fell to $11.45 billion in the nine weeks leading up to January 4, from $11.75 billion a year earlier. Same-store sales fell 0.8% over the nine weeks. Industry analysts had expected comparable-store sales to rise 0.5%.

JC Penney (NYSE:JCP) shares dropped 2.85% today after the company said that it will lay off 2,000 workers and close 33 underperforming stores.

On the economic front, initial claims for unemployment insurance came up lower than expected last week. Initial claims fell by 2,000 to 326,000. Economists expected 327,000 new claims. Consumer prices came in line with expectations. CPI rose 0.3% in December 2013. Excluding food and energy costs, prices rose 0.1%.

Twitter: @vincent_trivett
No positions in stocks mentioned.
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