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2024-09-07

Fed's Profits Plunge 46%, Wall Street's Big 5 Banks Hit by Bombshell

U.S. stocks have begun to release their Q4 earnings data, and the results have been a series of thunderclaps from the start, with all the "thunder" coming from Wall Street's famous investment banks.

In addition to these commercial banks experiencing "thunder," even the U.S. central bank, the Federal Reserve, has also "thundered." The latest data shows that the Federal Reserve's profits in 2022 plummeted by 46% compared to 2021.

Former U.S. Treasury Secretary Summers has warned the market that a U.S. recession is steadily approaching.

Investors find it hard to imagine what kind of 2023 the U.S. financial market will experience.

01. Five major banks "thunder"

Early this morning, several large U.S. banks announced their Q4 financial reports simultaneously.

Citibank's profits fell below market expectations, causing its stock price to drop by 3.5% at one point. However, the bank's revenue was slightly better than expected. But when combined with earnings per share of $1.16, this turned into bad news, indicating that the bank's profit margins are continuously declining, and the effects of inflation and interest rate hikes have become apparent.

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JPMorgan Chase's stock price also fell by 3% at one point, due to the company setting aside $2.3 billion for credit loss provisions in Q4, which is nearly a 50% increase from the previous quarter, filling the outside world with concern about the potential risks of JPMorgan Chase.

Wells Fargo's drop was even more than 4%. A year ago, Wells Fargo's net income reached $5.75 billion, but now it's only $2.86 billion, a drop of 50%.

Goldman Sachs' news indicates that the bank's new business lost $1.2 billion in the first nine months. This is an important step for Goldman Sachs to diversify its business. At the same time, Goldman Sachs is reducing its traditional business and stopped some consumer loans last month. However, the huge losses in the new business currently indicate that the business transformation is very unsmooth.BlackRock's financial data shows that profits fell sharply by 18% in the fourth quarter, and the stock price also fell by nearly 3%.

A former U.S. Treasury Secretary warned that a recession in the United States is approaching in 2023, and more and more corporate financial reports may show this in the future. Inflation continues, and the Federal Reserve continues to raise interest rates, and the risks have not passed.

02, U.S. stocks

As inflation in the United States continues to rise, it has caused significant erosion to the performance of listed companies. Subsequently, the Federal Reserve's continuous interest rate hikes have led to a continuous increase in market financing rates, and the financial costs of listed companies have also continued to rise, causing a second wave of profit erosion for listed companies.

The first to be affected were the stock prices of tech giants, and the impact has now spread to other industries, including the financial industry.

However, the impact on tech giants continues and has not stopped.

Although Tesla continues to announce new news of price reductions and promotions, the stock price fell by 1% again last night. Of course, looking at the whole week, Tesla has risen by 8%, and has rebounded significantly from the lowest point of $100 last week.

This week, Amazon had a higher increase, rising by 3% in the early morning, leading to a cumulative increase of 14% this week, setting a record for the highest single-week increase in two and a half years.

Chinese concept stocks also showed a general increase. Pinduoduo and Alibaba rose by 3%, and Baidu rose by 1%.

However, all of the new energy vehicles, including NIO, XPeng, and Li Auto, fell, with a drop of within 1%.03, Federal Reserve's Profit Halved

Continuous interest rate hikes are not only affecting individual businesses and commercial institutions, but the U.S. central bank itself has also been significantly impacted.

Data released in the early hours of today show that the Federal Reserve's profits in 2022 have plummeted.

Preliminary calculations indicate that the current net profit stands at $58 billion, a 46% decrease compared to the previous year's $107.9 billion.

Even the central bank, which specializes in continuously printing money, finds it difficult to ensure its own profits. What kind of surprises will the U.S. financial market experience in 2023?

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