Market update: Banks kick off earnings season

This week in the markets

  • Earnings season kicked off this week with major US banks like Goldman Sachs, Bank of America, and Citigroup reporting fourth-quarter 2018 revenues.
  • Pacific Gas & Electric (PG&E) will no longer be included in the Standard and Poor’s 500 Index (S&P 500) or the Dow Jones Industrial Average (DJIA) due to its planned bankruptcy filing.
  • The Internal Revenue Service (IRS) expects tax season to continue on schedule despite the government shutdown.

Kickoff to earnings season

Earnings season kicked off this week with many major US banks on Wednesday reporting revenue from the fourth quarter of 2018. Corporate earnings season occurs immediately following the end of each fiscal quarter, when companies report their quarterly earnings to the public. Here are some highlights so far:

  • Goldman Sachs had some rather impressive results, reporting revenue and profit figures that were higher than analysts’ expectations. At Wednesday’s close (the day of the earnings announcement), the bank’s shares were up 9.54%.
  • Bank of America also came in higher than analysts’ expectations in both profit and revenue, causing shares of the company to soar 7% at Wednesday’s close.
  • Citigroup’s revenue, on the other hand, came in a half-billion dollars short of what analysts had predicted. However, the report didn’t impact share prices, which still rose slightly at Wednesday’s close.

Why do earnings reports matter to you?

One way for investors to assess the value of a stock is to consider the growth in that company’s earnings. Stock prices generally go up if corporations are more profitable. That’s why earnings reports help investors choose which companies to invest in. It’s also vital to keep a diversified portfolio, like the MoneyLion Zero-Fee Managed Investment Account℠, to help cushion against an individual company’s declines.

PG&E is being replaced on two major indexes

Pacific Gas & Electric’s (PG&E) stock price crashed 52% on Monday after the company announced it plans to file Chapter 11 bankruptcy. The utility company is being blamed for California wildfires in 2017 and 2018 and now may owe over $30 billion to homeowners, business, and local governments. This week, the S&P 500 and DJIA both announced that PG&E would no longer be included in the indexes due to its bankruptcy filing. Since there is a set number of companies in each index, PG&E will be replaced by Teleflex Inc. within the S&P 500, and by Sempra Energy within the DJIA.

IRS plans to issue tax refunds despite the shutdown

As of [Thursday, January 17], the government shutdown, which is now the longest in history, should not impact your federal tax returns, according to the IRS. Despite the shutdown, the IRS expects to open the filing season on January 28 and has said it will pay taxpayers their refunds. The IRS has indicated that it plans to bring back nearly 50,000 members of its workforce without pay to cover staffing needs during tax season. Hopefully working without pay doesn’t slow the agency down!

And now for your weekly Lionomics wrap-up. 🤓

Lionomics: Finance made easy

This week in Lionomics, we discussed the impact of the labor market on the economy. The job market is a key indicator for determining whether asset classes like stocks can also perform well. We also went into more detail about the impact of earnings seasons on investors. Find out what you should look out for.

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