Earnings Of Listed U.S. Companies, Banks Take A Beating
S&P 500 fourth-quarter earnings-per-share estimates have dropped by about 7% since October 2022 and early earnings reports from some of the largest financial institutions point to a bleak quarter, Nicole Goodkind reported for CNN Business.
Photo Insert: Bank of America also beat earnings expectations but CEO Brian Moynihan said Friday that the bank is preparing for rising unemployment and a recession in 2023.
The estimated earnings decline for the S&P 500 in the fourth quarter of 2022 is -3.9%, according to a FactSet analysis.
If that is indeed the actual drop, it will mark the first earnings decline reported by the index since the third quarter of 2020. Over the past few weeks, reported FactSet, earnings expectations for the first and second quarters of 2023 switched from year-over-year growth to year-over-year declines.
JPMorgan has beaten estimates for fourth-quarter revenue but also increased the amount of money for expected defaults on loans.
The bank added a $2.3 billion provision for credit losses in the quarter, a 49% increase from the third quarter. The move was driven by a "modest deterioration in the Firm's macroeconomic outlook, now reflecting a mild recession in the central case," said the report.
On a subsequent call, JPMorgan CFO Jeremy Barnum told reporters that the bank expects a recession to hit by the fourth quarter of 2023.
Bank of America also beat earnings expectations but CEO Brian Moynihan said Friday that the bank is preparing for rising unemployment and a recession in 2023. "Our baseline scenario contemplates a mild recession," he said.
The bank added a $1.1 billion provision for credit losses, a sharp change from last year when that number was negative. This week, 26 S&P 500 companies are scheduled to report results for the fourth quarter.