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Business

JPMorgan Chase, Wendy’s and more

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A sign is posted in front of a Wendy’s restaurant on August 10, 2022 in Petaluma, California.

Justin Sullivan | Getty Images

Check out the companies making headlines in midday trading.

JPMorgan – Shares of the biggest U.S. bank by assets rose more than 2% after the firm posted fourth-quarter profit and revenue that topped expectations. The New York-based bank said profit jumped 6% from the year earlier period to $11.01 billion, or $3.57 per share. Interest income at the bank surged 48% on higher rates and loan growth.

Citigroup — Citigroup’s stock added more than 1% as the company reported a record fourth quarter for fixed income. The bank said net income decreased during the period by more than 21% over last year as it set aside more money for potential credit losses.

Delta Air Lines — The airline stock edged about 4% lower after the company said in its outlook that higher labor costs would hurt its first-quarter profits. Delta topped analysts’ expectations on the top and bottom lines for the fourth quarter.

Wendy’s — The fast-food chain’s stock added 5.7% after Wendy’s shared positive preliminary fourth-quarter results and announced a handful of reshuffles within its corporate structure. A regulatory filing also indicated that Nelson Peltz does not want to take over Wendy’s.

Wells Fargo – The bank stock dipped 0.1% after the firm reported shrinking profits, weighed down by a recent settlement and the need to build up reserves amid a deteriorating economy. Wells Fargo’s net income tumbled 50% to $2.86 billion from $5.75 billion a year ago. The bank set aside $957 million for credit losses after reducing its provisions by $452 million a year ago.

Bank of America —The financial stock rose less than 1% on Friday after Bank of America beat estimates on the top and bottom lines for the fourth quarter. A sharp rise in net interest income helped the results, though management cautioned that the metric could decline sequentially in the first quarter. CEO Brian Moynihan also said that a mild recession was the firm’s baseline assumption for 2023.

Virgin Galactic Holdings — The space tourism company jumped nearly 13% after it said it was on track for a commercial launch in the second quarter of 2023. The company also announced its president of aerospace systems, Swami Iyer, was leaving.

Tesla — Shares of the electric-vehicle maker shed more than 2% after being downgraded to sell from neutral by Guggenheim and cutting prices on its vehicles in the U.S. and Europe. In its downgrade, Guggenheim cited concerns with Tesla’s fourth-quarter estimates.

Bank of New York Mellon — Shares of the mid-sized bank rose 2.5% on Friday after the company reported net income of $509 million for the fourth quarter. That was down 38% year over year but up about 60% from the third quarter. That profit rose to $1.1 billion, or $1.30 per share, when excluding certain items, but it is unclear if those results were comparable to analysts’ estimates.

UnitedHealth — The health-care stock advanced more than 1% after the company surpassed Wall Street’s fourth-quarter expectations. UnitedHealth reported adjusted earnings of $5.34 a share on $82.8 billion in revenue. Analysts polled by Refinitiv expected earnings of $5.17 per share on revenues of $82.59 billion.

Lockheed Martin — The defense stock slipped more than 3% after Goldman Sachs downgraded shares to sell from a neutral rating. The firm said shares could fall if the government trims defense spending. Northrop Grumman shares also dove 5% on Goldman’s downgrade to a sell from neutral rating.

Salesforce — The software stock shed 1% following a downgrade to neutral from overweight by Atlantic Equities. The firm said the stock would likely be hurt by executive departures and slowed growth.

Logitech — Shares of the consumer electronics company dipped 3.3% after Deutsche Bank downgraded the shares to a hold from a buy rating. The decline built on Thursday’s losses after reporting preliminary results that signaled slowing sales and earnings.

Warner Music Group – Shares of Warner Music Group shed 5.5% after Guggenheim cut its rating on the stock to neutral from buy and trimmed its price target to $35 from $38, citing worries about revenue from the music streaming service.

Copa — Shares of the Latin American airline jumped 4.9% following an upgrade to overweight from a neutral rating by analysts at JPMorgan. The bank said shares could rally 50% as air travels resurges.

AutoNation — AutoNation’s stock fell 4.3% as Wells Fargo downgraded the automotive retailer to equal weight from an overweight rating, saying that its valuation looks “reasonable” and estimates look too high.

— CNBC’s Jesse Pound, Yun Li, Michelle Fox, Alex Harring and Carmen Reinicke contributed reporting

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Business

Wall Street layoffs pick up steam as Citigroup and Barclays cut hundreds of workers

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A trader, center, wears a Citigroup jacket while working on the floor of the New York Stock Exchange (NYSE) in New York.

Michael Nagle | Bloomberg | Getty Images

Global investment banks Citigroup and Barclays cut advisory and trading personnel this week as Wall Street grapples with sharp declines in revenue and dimming prospects for next year.

New York-based Citigroup let go of roughly 50 trading personnel this week, according to people with knowledge of the moves who declined to be identified speaking about layoffs. The firm also cut dozens of banking roles amid a slump deal-making activity, Bloomberg reported Tuesday.

London-based Barclays cut about 200 positions across its banking and trading desks this week, according to a person with knowledge of the decision.

The moves show the industry has returned to an annual ritual that’s been part of what has defined life on Wall Street: Cutting workers who are deemed to be underperformers. The practice, which had been on pause the last few years amid a boom in deals activity, returned after Goldman Sachs laid off hundreds of employees in September.

While shallow in nature, especially compared with far deeper cuts occurring in tech firms including Meta and Stripe, the moves may only be the start of a trend if capital markets remain moribund.

Equity issuance plunged 78% this year through October as the IPO market remained mostly frozen, according to SIFMA data. Debt issuance has also fallen off as the Federal Reserve boosts interest rates, slumping 30% through September.

No reprieve in 2023

In recent weeks, executives have grown pessimistic, saying that revenue from robust activity in parts of the fixed-income world has probably peaked this year, and that equities revenue will continue to decline amid a bear market in stocks.

“Most of the banks are budgeting for declines in revenue next year,” according to a person involved with providing data and analytics to the industry. “Investors know the general direction of the market, at least in the first half, and the thinking is that client demand for hedging has probably peaked.”

Among Wall Street players, beleaguered Credit Suisse is contending with the deepest cuts, thanks to pressure to overhaul its money-losing investment bank. The firm has said it is cutting 2,700 employees in the fourth quarter and aims to slash a total of 9,000 positions by 2025.

But even workers toiling at Wall Street’s winners — firms that have gained market share from European banks in recent years — aren’t immune.

Underperformers may also be at risk at JPMorgan Chase, which will use selective end-of-year cuts, attrition and smaller bonuses to rein in expenses, according to a person with knowledge of the bank’s plans.

Morgan Stanley is also examining job cuts, although the scope of a potential reduction in force hasn’t been decided, according to a person with knowledge of the company. Lists of workers who will be terminated have been drawn up in Asian banking operations, Reuters reported last week.

To be sure, managers at Barclays, JPMorgan and elsewhere say they are still hiring to fill in-demand roles and looking to upgrade positions amid the industry retrenchment.

Spokespeople for the banks declined to comment on their personnel decisions.

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Jim Cramer recaps 4 major banks’ earnings reports

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CNBC’s Jim Cramer on Friday offered investors his thoughts on the major banks that reported earnings this week.

“If the whole market hadn’t already roared yesterday, I think we could’ve had a nice rally in response to these numbers. But, as it is, I’d say this is a surprisingly solid start to earnings season,” he said.

JPMorgan Chase, Morgan Stanley, Wells Fargo and Citigroup reported their latest quarterly results on Friday. Here is Cramer’s take on each of the banks’ latest quarters:

JPMorgan Chase

JPMorgan Chase beat Wall Street expectations for its top and bottom line, aided by the Federal Reserve’s interest rate hikes. Cramer said he was surprised that the bank had a solid quarter since CEO Jamie Dimon warned that the U.S. economy would likely enter a recession in the middle of next year. 

However, Cramer said he still expected the bank to see a boost from rising rates.

“The banks make a fortune when the Federal Reserve raises interest rates, because they can take your deposits, which they pay next to nothing for, and then invest them in short-term Treasurys to get a much higher risk-free return,” he explained.

Wells Fargo

The bank beat on earnings and revenue in its latest quarter but saw a cut to its bottom line from its decision to boost its loan loss reserves. 

Cramer said he likes the stock because the company has more interest rate exposure than most of its peers, which makes it attractive during a high-interest rate environment. And while a risk of higher rates is that people could lose their jobs and have to default on their obligations, which would result in a higher percentage of bad loans, Wells Fargo’s strength in its net interest income is more than enough to offset the damage from bad loans, according to Cramer.

“I remain a believer here — management’s executing incredibly well — I think the story only gets better as rates go higher,” he said. “Buy Wells Fargo.”

Morgan Stanley

Cramer said that he believes the market overreacted to Morgan Stanley’s third-quarter earnings and revenue miss. Shares of the bank fell 5%.

While he acknowledged that the quarter was rough, Cramer maintained that he believes the stock is a buy, highlighting the company’s generous dividend and stock buyback.

“I think Morgan Stanley can eventually thrive once the markets even out, but until then, you’ve got to be patient in this one,” he said.

Citigroup

Cramer said that he’d rather own the other banks than Citi, which beat on revenue and earnings in its latest quarter but saw a 25% decline in profits. Shares of the company rose 0.65%.

“We’ve seen Citi rally in response to earnings a number of times. … And then you know what happened? The gains quickly faded, and the stock came right back down,” he said.

Disclaimer: Cramer’s Charitable Trust owns shares of Morgan Stanley and Wells Fargo.

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Business

U.S. stocks struggling to make ‘crazy’ bounce-back rally stick as earnings season gets under way

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U.S. stocks saw early gains fizzle Friday, with the market turning south after attempting to build on a bounce in the previous session that marked what’s been called one of the craziest market days in history.

Stocks turned lower after a closely watched survey showed consumer inflation expectations were on the rise, while investors were also weighing a round of results from big Wall Street banks as earnings reporting season gets under way.

What’s happening
  • The Dow Jones Industrial Average
    DJIA,
    -0.80%
    fell 223 points, or 0.7%, to 29,815, after rising 390 points at its session high.
  • The S&P 500
    SPX,
    -1.67%
    was down 58 points, or 1.6%, at 3,612.
  • The Nasdaq Composite declined 227 points, or 2.1%, to 10,422.

On Thursday, the Dow erased a plunge of nearly 550 points to end 828 points higher, while the S&P 500 bounced back from a loss of more than 2% to end 2.6% higher, and the Nasdaq Composite jumped 2.2%.

The Dow’s 2.8% rise was the largest one-day gain since Nov. 9, 2020.

See: Why stocks scored a historic bounce after another hot inflation report

What’s driving markets

Gains early Friday gave way to losses after the University of Michigan’s consumer sentiment survey showed expectations for inflation over the next year rose to 5.1% from September’s one-year low of 4.7%, while expectations for inflation over the next 5 years ticked up to 2.9% from 2.7% last month.

“The uptick in inflation expectations probably is a response to the increase in gas prices in recent weeks, in which case it won’t continue,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note, observing that preliminary readings tend to see big revisions.

“Still, on the heels of the September inflation data this rebound — reversing the drop last month — does not look good, given how closely policy makers appear to track the measure,” Shepherdson said.

The survey’s gauge of consumer sentiment rose to 59.8 in October from 58.6. Economists were expecting a reading of 59, according to a Wall Street Journal poll.

Data Friday also showed U.S. retail sales were unchanged in September, coming in below forecasts for a 0.3% rise. Excluding autos, sales rose 0.3%.

Analysts cited a number of factors to explain the huge rise in stocks on Thursday, which came after equities initially tanked following a hotter-than-expected September consumer-price index reading.

Factors behind the bounce included technical and positioning considerations after a steep selloff that had seen the S&P 500 index tumble for six sessions in a row to end Wednesday at its lowest since November 2020.

“Among the most frequent explanations is that the most pessimistic of all possible scenarios were built into prices: a 75-point rate hike at the next two meetings,” said Alex Kuptsikevich, senior market analyst at FxPro, in a note. “After this, market participants turned their attention to substantial discounts to prices from their highs with a relatively healthy economy that continues to create jobs and raise wages,”

But caution still prevailed on Friday.

“Despite October’s notoriety as a ‘bear market killer’ and an auspicious intraday move, investors should maintain a certain degree of caution. A real change in trend requires a shift in fundamentals. And those changes are still not easy to identify,” Kuptsikevich said.

Rick Rieder, the chief investment officer for fixed income at BlackRock, told MarketWatch’s Christine Idzelis that Thursday’s gyrations marked one of the “craziest” days in market history, coming after data showing U.S. September inflation running at a hotter-than-expected pace.

“One of the largest intraday reversals in recent memory off a closely watched CPI print underscores the oversold condition and sentiment extreme in this market. The vulnerability wasn’t in the number, the vulnerability was in the positioning leading up to the number,” said Jeff deGraaf, founder of Renaissance Macro Research, in a Friday note.

BlackRock’s Rieder advised investors to consider parking their money in short-term bonds, a point recently echoed by hedge-fund legend Ray Dalio.

Shares of JPMorgan Chase & Co.
JPM,
+3.39%
were up 2.7% after the bank and Dow component beat Wall Street targets for earnings and revenue.

Analysts were also weighing results from Wells Fargo & Co.
WFC,
+3.52%
and Morgan Stanley
MS,
-4.25%,
and Citigroup Inc.
C,
+1.43%.

See: JPMorgan profit falls but beats estimates while Wells Fargo misses

Investors were also monitoring developments in the U.K., where Prime Minister Liz Truss fired Kwasi Kwarteng from his role as chancellor of the exchequer. Yields on U.K. government bonds spiked after Kwarteng presented a budget plan that included large tax cuts in late September, sparking a crisis that required the Bank of England to step in with an emergency buying program.

Read: Why Kwasi Kwarteng could not survive the battle with the Bank of England

U.K. bond yields initially dropped on Friday on indications many of the planned tax cuts would be reversed. But they later rose after Truss only reversed corporate tax cuts.

Also see: Larry Summers says U.K. debt market stress could be the ‘tremor’ signaling global economic ‘earthquake’

The Federal Reserve needs to continue raising interest rates but should be careful about the pace of these moves, Kansas City Fed President Esther George said on Friday.

Companies in focus
  • Wells Fargo
    WFC,
    +3.52%
    shares rose 3.8% after the bank posted stronger-than-expected revenue for the third quarter, offsetting a profit miss.
  • Shares of Morgan Stanley
    MS,
    -4.25%
    fell 4.5% after the investment bank missed Wall Street’s targets for earnings and revenue amid a drop in deal activity.
  • Citigroup
    C,
    +1.43%
    shares rose 1.9% after the bank topped Wall Street forecasts on earnings and revenue.
  • UnitedHealth Group Inc.
    UNH,
    +1.77%
    shares were up 1.6% after the Dow component and health insurer reported third-quarter profit and revenue that rose above expectations, and lifted its full-year outlook for a third-straight quarter.
  • Kroger Co.
    KR,
    -5.04%
    announced a $24.6 billion deal to buy Albertsons Cos. Inc.
    ACI,
    -7.39%.
    Under the terms of the merger agreement, Kroger will acquire all of the shares outstanding of Albertsons’ common and preferred stock for an estimated $34.10 per share. Kroger shares fell 4.9%, while Albertsons was off 7%. Shares of Albertsons jumped more than 11% Thursday on reports of a potential deal, while Kroger rose 2%.
  • Beyond Meat Inc.
    BYND,
    -6.02%
    shares fell 6.2% after the plant-based food company issued a revenue warning, announced a plan to cut about 200 workers and said it’s cutting other costs as it makes a strategic shift aimed at achieving positive cash flow operations.

Also see: Beyond Meat COO Douglas W. Ramsey is leaving the company after being suspended for allegedly biting a man’s nose

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Business

Dow futures fall 170 points to start week with key inflation data, earnings ahead

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Traders on the floor of the New York Stock Exchange.

Getty Images

Stock futures are lower Sunday night as the markets come out of a tumultuous week and traders look ahead to key reports coming in the next week that can offer insights into the health of the economy.

Futures connected to the Dow Jones Industrial Average slid 0.6% to 29,175 points. S&P 500 futures dropped 0.7% to 3,626.25 points, while Nasdaq 100 futures slipped 0.8% to 11,014.25 points.

Market observers generally consider the week ahead as the kickoff to earnings season, with four of the world’s largest banks – JPMorgan, Wells Fargo, Morgan Stanley and Citi – reporting Friday. PepsiCo, Delta and Domino’s are also among companies reporting next week.

Inflation will also take center stage as new monthly Consumer Price Index data comes Thursday morning.

It will follow a week of whiplash for market participants. The first half brought a relief rally that pushed the S&P 500 up more than 5% in its largest two-day gain since 2020.

But jobs data that economists say will keep the Federal Reserve on a path to continue raising interest rates and OPEC+’s decision to slash oil supply rattled investors, diluting wins later in the week. When day trading ended Friday, the S&P was up 1.5% compared to where it started the week. The Dow and Nasdaq were up 1.5% and 0.7%, respectively.

Still, the Dow, S&P 500 and Nasdaq had the first positive week in the last four. All remain down substantially so far in 2022, however, and the Nasdaq is less than 1% away from its 52-week low.

Meanwhile, the 2-year Treasury yield rose 6 basis points, closing at 4.316%. One basis point is equivalent to 0.01%.

“The direction of the stock market is likely to be lower because either the economy and corporate profits are going to slow meaningfully or the Fed is going to have to raise rates even higher and keep them higher for longer,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, on Friday.

“Given the conditions that we are operating under, we believe it’s prudent to begin preparing for a recession,” he added. “The talk of a shallow recession that is now the narrative-du-jour strikes us as eerily similar to the ‘inflation is transitory’ narrative of last year.”

Last week brought heightened concerns that corporate earnings will show the ugly side of a surging dollar as Levi Strauss became the latest to cut guidance due to sliding international sales.

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Business

Here’s who made Fortune’s Most Powerful Women in Business list for 2022

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The competition to be listed among Fortune’s Most Powerful Women has gotten a little stiffer this year. In recognition of just how global business has become, Fortune decided to merge its domestic and international lists of top corporate women leaders.

Still, in some ways, this year’s top 10 list is similar to last year’s with a few exceptions.

Coming in at No. 1 for the second year running is CVS Health president and CEO Karen Lynch, who is leading the highest-ranking Fortune 500 and Global 500 company ever run by a woman. On her watch – she took the helm in February 2021 – the company’s revenue jumped 9% and its share price gains (up 42%) well outpaced performance of the S&P 500. CVS, meanwhile, continued to be a central player in the fight against Covid, and Lynch implemented a mental health program to help prevent suicide among its Aetna members.

Ranking close behind Lynch once again are Julie Sweet, chair and CEO of Accenture (No. 2); Jane Fraser, CEO of Citi (No. 3); and Mary Barra, chair and CEO, GM (No. 4).

But the No. 5 spot went to Jessica Tan, co-CEO and executive director of Ping An Insurance (Group) Company of China, Ltd, which is the 25th largest company in the world. Fortune notes that despite China’s Covid lockdowns and “skittish consumer sentiment,” Ping An under Tan’s leadership beat profit expectations in the first half of 2022 and aims to achieve carbon neutrality by 2030.

Also new to the top 10 relative to Fortune’s domestic list last year is Emma Walmsley, CEO of global drugmaker GSK. She spun off her company’s $13 billion consumer health unit. “That leaves the now exclusively pharma-focused GSK with a pile of cash to invest in promising drug and vaccine candidates,” Fortune notes.

Two executives, meanwhile, fell out of the top 10 from last year: Thasunda Brown Duckett, president and CEO of TIAA; and Ruth Porat, senior vice president and chief financial officer of Alphabet. But neither fell far, ranking as No. 11 and 12, respectively.

Here are the top 10 women executives on Fortune’s 2022 Most Powerful Women list:

1. Karen Lynch, president and CEO, CVS Health

2. Julie Sweet, chair and CEO, Accenture

3. Jane Fraser, CEO, Citigroup

4. Mary Barra, chair and CEO, GM

5. Jessica Tan, executive director and Co-CEO, Ping An Insurance

6. Carol Tomé, CEO, UPS

7. Rosalind Brewer, CEO, Walgreens Boots Alliance

8. Emma Walmsley, CEO of GSK

9. Gail Boudreaux, president and CEO, Elevance Health

10. Abigail Johnson, chair and CEO, Fidelity Investments

(For more on each of these executives, here is Fortune’s full list of the top 50 Most Powerful Women in Business. Please note a subscription is required.)

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Business

Citigroup (C) 2Q 2022 earnings beats

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Jane Fraser, CEO of Citi, says she is convinced Europe will fall into recession as it faces the impact of the war in Ukraine and the resultant energy crisis.

Patrick T. Fallon | AFP | Getty Images

Citigroup on Friday posted second-quarter results that beat analysts’ expectations for profit and revenue as the firm benefited from rising interest rates and strong trading results.

Here’s what the bank reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $2.19 vs $1.68 expected
  • Revenue: $19.64 billion vs $18.22 billion expected

Shares of the bank rose 8% in early New York trading.

Profit declined 27% to $4.55 billion, or $2.19 per share, from $6.19 billion, or $2.85, a year earlier, the New York-based bank said in a statement, as the bank set aside funds for anticipated loan losses. But earnings handily exceeded expectations for the quarter as analysts have been slashing estimates for the industry in recent weeks.

Revenue rose a bigger-than-expected 11% in the quarter to $19.64 billion, more than $1 billion over estimates, as the bank reaped more interest income and saw strong results in its trading division and institutional services business. Net interest income jumped 9% to $11.96 billion, topping the $11.21 billion estimate of analysts surveyed by Street Account.

Of the four major banks to report second-quarter results this week, only Citigroup topped expectations for revenue.

“In a challenging macro and geopolitical environment, our team delivered solid results and we are in a strong position to weather uncertain times, given our liquidity, credit quality and reserve levels,” Citigroup CEO Jane Fraser said in the release.

Corporate cash management, Wall Street trading and consumer credit cards performed well in the quarter, she noted.

The firm’s institutional clients group posted a 20% jump in revenue to $11.4 billion, roughly $1.1 billion more than analysts had expected, driven by strong trading results and growth in the bank’s corporate cash management business. Treasury and trade solutions generated a 33% increase in revenue to $3 billion.

Fixed income trading revenue surged 31% to $4.1 billion, edging out the $4.06 billion estimate, thanks to strong activity on rates, currencies and commodities desks, Citigroup said. Equities trading revenue rose 8% to $1.2 billion, just under the $1.31 billion estimate.

Similar to peers, investment banking revenue dropped a steep 46% to $805 million, missing the $922.8 million estimate.

Bank stocks have been hammered this year over concerns that the U.S. is facing a recession, which would lead to a surge in loan losses. Like the rest of the industry, Citigroup is also contending with a sharp decline in investment banking revenue, offset by the boost to trading results in the quarter.

Despite Friday’s stock gain, Citigroup remains the cheapest of the six biggest U.S. banks from a valuation perspective. The stock was down 27% in 2022, as of Thursday’s close, when its shares hit a 52-week low.

To help turn around the firm, Fraser has announced plans to exit retail banking markets outside the U.S. and set medium-term return targets in March.

Earlier Friday, Wells Fargo posted mixed results as the bank set aside funds for bad loans and was stung by declines in its equity holdings.

On Thursday, bigger rival JPMorgan Chase posted results that missed expectations as it built reserves for bad loans, and Morgan Stanley disappointed on a worse-than-expected slowdown in investment banking fees.

Bank of America and Goldman Sachs are scheduled to report results on Monday.

This story is developing. Please check back for updates.

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Top stock picks for the second half of 2022

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Treasury yields fall as traders track economic data, Fed remarks

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U.S. Treasury yields slipped Wednesday as investors continue to assess the economic outlook amid rising recession fears.

At around 5:48 a.m. ET, the yield on the benchmark 10-year Treasury note was down at 3.173%, while the yield on the 30-year Treasury bond dropped to 3.285%. Yields move inversely to prices.

As the second quarter draws to a close on Thursday, concern over a slowing economy and aggressive interest rate hikes from the Federal Reserve continue to dominate market sentiment.

An attempted rally for risk assets fizzled out on Tuesday after a disappointing consumer confidence reading, which came in at 98.7, below Dow Jones’ consensus estimates of 100.

The Conference Board’s one-year ahead inflation expectations hit a record high of 8.0%, exceeding the 7.7% seen in June 2008, while the Richmond Fed’s manufacturing index came in at -19, its lowest since May 2020 and well below consensus expectations of -7.

Fed Chairman Jerome Powell is due to give a speech at the European Central Bank forum at 9 a.m. ET. Powell acknowledged in a testimony to the Senate banking committee last week that steep rate hikes may tip the U.S. economy into recession, but reiterated the central bank’s commitment to reining in inflation.

On the economic data front, final first-quarter GDP figures are due at 8:30 a.m., along with PCE prices, corporate profits and consumer spending data.

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5 things to know before the stock market opens Monday, April 18

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Here are the most important news, trends and analysis that investors need to start their trading day:

1. Stock futures fall as the 10-year Treasury yield tops a 3-year high

Traders on the floor of the NYSE, April 14, 2022.

Source: NYSE

2. BofA issues stronger earnings as it releases reserves for soured loans

A woman is reflected in a puddle as she passes a Bank of America branch in New York’s Times Square.

Brendan McDermid | Reuters

Bank of America, the last of the major banks to report earnings, on Monday delivered a better-than-expected 80 cents per share profit on revenue of $23.33 billion. BofA’s decision to release $362 million in loan-loss reserves was in contrast to JPMorgan Chase, which disclosed last week that it opted to build reserves by $902 million. JPMorgan said profit also slumped due to losses tied to Russia sanctions. Goldman Sachs, Morgan Stanley and Citigroup each topped expectations with stronger-than-expected trading results. Wells Fargo missed on revenue as mortgage lending declined.

3. Elon Musk’s tweet suggests an appeal directly to Twitter shareholders

Elon Musk posted a tweet Saturday, saying “Love Me Tender,” days after making an unsolicited $43 billion cash offer to buy Twitter. After a TED talk Thursday, Musk hinted at the possibility of a hostile bid, in which he would bypass the social media company’s board and put the offer directly to shareholders.

The tweet seemed to imply Musk, the world’s richest person and CEO of both Tesla and SpaceX, might seek to buy shares from investors in what’s called a tender offer. Twitter on Friday adopted a “poison pill” to limit Musk’s ability to raise his stake in the company. Shares of Twitter rose more than 3.5% in the premarket.

4. China’s first-quarter GDP beats estimates despite Covid lockdowns

A health worker wears a protective suit as he disinfects an area outside a barricaded community that was locked down for health monitoring after recent cases of COVID-19 were found in the area on March 28, 2022 in Beijing, China.

Kevin Frayer | Getty Images

China’s first-quarter gross domestic product grew a faster-than-expected 4.8% despite the impact of Covid lockdowns in March. Beginning last month, China struggled to contain its worst Covid outbreak since the initial phase of the pandemic in 2020. Three people have died as of Sunday, officials of locked-down Shanghai said, attributing the fatalities to preexisting health conditions. Shanghai began a two-stage lockdown and mass virus testing in late March that was supposed to stop after just over a week later. But authorities have yet to set an end date.

5. Russian strikes kill at least 7 people in Lviv, Ukrainian officials say

Dark smoke rises following an air strike in the western Ukrainian city of Lviv, on April 18, 2022.

Yuriy Dyachyshyn | AFP | Getty Images

Russian missiles hit Lviv in western Ukraine on Monday, killing at least seven people, Ukrainian officials said, as Moscow’s troops stepped up strikes on infrastructure in preparation for an all-out assault in the east. Mariupol, the besieged eastern city, has refused Russia’s demand to surrender. The mayor of Mariupol said last week that 10,000 civilians have died there. “The targeting of populated areas within Mariupol aligns with Russia’s approach to Chechnya in 1999 and Syria in 2016,” the U.K. Ministry of Defense said in an intelligence update.

— CNBC’s Hannah Miao, John Melloy, Sarah Min, Tanaya Macheel, Hugh Son, Evelyn Cheng, Natasha Turak and Ted Kemp as well as Reuters and The Associated Press contribute to this report.

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