Nasdaq 100, Dow Jones, S&P 500: Bank of America, Johnson & Johnson Beat Forecasts, Goldman Sachs Misses

Highlights

• Bank of America Beats Estimates on Rising Interest Rates
• Johnson & Johnson Forecasts Strong 2023 Sales
• Goldman Sachs Struggles with Weaker-Than-Expected Q1 Results

Overview

On Tuesday morning, the S&P 500 Index surged, driven by a significant round of Q1 earnings results that exceeded Wall Street’s expectations. These positive outcomes indicate that many companies are performing well despite a challenging economic environment.

Additionally, the upbeat earnings reported by Bank of America and Johnson & Johnson further boosted U.S. stock index futures. However, gains were tempered by disappointing results from Goldman Sachs. Additionally, concerns over an uneven economic recovery in China and the possibility of more Federal Reserve interest rate hikes also weighed.

At 13:17 GMT, benchmark S&P 500 Index futures are trading 4195.00, up 18.25 or +0.44%. This is leading investors to predict a higher trade on the cash market opening.

Bank of America’s Q1 Earnings Surpass Expectations on Higher Interest Rates

Bank of America reported better-than-expected earnings and revenue for the first quarter of 2022, driven by higher interest rates. The bank’s earnings per share were 94 cents versus the expected 82 cents, and revenue was $26.39 billion, beating the estimated $25.13 billion. Bank of America’s net interest income increased 25% year-over-year to $14.4 billion due to rising interest rates.

The bank’s CEO, Brian Moynihan, attributed the positive results to the bank’s long-term commitment to responsible growth. Sales and trading revenue rose by 7% to $5.1 billion, with fixed income, currency, and commodity trading revenue rising 27% to $3.4 billion.

Johnson & Johnson Exceeds Expectations with Strong Q1 Earnings and Raises Forecast

Johnson & Johnson has reported Q1 adjusted earnings and revenue that exceeded Wall Street’s expectations, and the company has raised its full-year forecast as it saw growth across all business units, led by its pharmaceutical division. The company’s Q1 sales grew by 5.6% YoY, while its adjusted earnings per share were $2.68 for the period.

Johnson & Johnson is now forecasting 2023 sales of $97.9 billion to $98.9 billion and raised its full-year adjusted earnings outlook to $10.60 to $10.70 per share. The company’s shares were flat in premarket trading but have declined by over 6% YTD. Johnson & Johnson’s CFO said that the company raised its guidance due to strong growth in all three business sectors, including consumer health, pharmaceuticals, and medical devices.

Goldman Sachs Misses Revenue Expectations with Q1 Results Due to Consumer Loan Hit

Goldman Sachs posted Q1 results that missed analysts’ revenue expectations due to a $470 million hit tied to the sale of consumer loans. The bank’s earnings per share were $8.79. This exceeded Refinitiv’s estimate of $8.10. Meanwhile, revenue was $12.22 billion, below the estimated $12.79 billion. Company-wide revenue fell 5% to $12.22 billion due to the consumer loan hit and weaker-than-expected bond trading and asset & wealth management results.

The bank’s trading and investment banking revenue dropped from a year ago, leading to few options to generate revenue growth. The bank’s asset & wealth management division saw a 24% YoY increase in revenue to $3.22 billion, well below the estimated $3.7 billion. Goldman Sachs’ return on tangible equity of 12.6% is below the bank’s longer-term target of 15% to 17% returns.

Goldman Sachs shares slipped 3.8% in premarket trading.

For a look at all of today’s economic events, check out our economic calendar.