Everybody loves a good comeback story, as golf fans might tell you following Tiger Woods’ unexpected victory at the Masters over the weekend. The markets have also staged quite a comeback since the end of 2018, and there was more evidence of that Friday when the S&P 500 Index (SPX) closed above 2900 for the first time since last fall.
The SPX is now up more than 23% from its Dec. 24 low as earnings season begins, and JPMorgan Chase & Co (NYSE: JPM) got things off pretty nicely on Friday. Now it’s time for more big banks to report, and the first one Monday, from Goldman Sachs Group Inc (NYSE: GS), looks like it might be a bit of a puzzle.
Fresh Bank Earnings To Ponder
As detective Sherlock Holmes once said, “Well, Watson, what do you make of it?” Investors might be asking themselves the same question this morning after a first glance at Goldman Sachs’ earnings as another huge week of quarterly big bank reporting begins.
Goldman Sachs took care of business on the earnings side of the equation in Q1, easily surpassing third-party consensus estimates with a $5.71 earnings per share reading. The average analyst projection was $4.96.
However, revenue of $8.81 billion came in under third-party consensus of $9.07. The lower than expected top line appeared to reflect weaker trading activity in the quarter, something many analysts had predicted going into bank earnings due in part to low volatility in the markets and investor shyness after stocks cratered in December.
Fixed income trading revenue fell 11% to $1.84 billion, and stock-trading revenue tumbled 24% to $1.77 billion. There’s no way to get around it. These just aren’t very good numbers, though they weren’t surprising considering they came in near analyst estimates. The question is whether investors might