Goldman Sachs had a significantly more profitable quarter than expected, lifted by continued strength in the trading of stocks and bonds and gains from certain investments.
The bank reported earnings of $3.62 billion, far higher than Wall Street analysts had projected, and revenue of $10.78 billion for the third quarter.
At a time when the markets were particularly active, Goldman continued its winning streak in trading, with significant gains from handling bond products tied to interest rates, mortgages, corporate credit and commodity prices, which together drove bond division revenue up 49 percent from the same period last year. Stock trading revenue was also higher, but by a less substantial margin.
Revenue in the firm’s asset-management division was up 71 percent, driven by investments in stocks held by Goldman.
Company shares rose nearly 4 percent in early trading.
Lower credit losses expected
Bank of America earned $4.9 billion in the third quarter, up from $3.5 billion in the second quarter, but down from $5.8 billion in the same period a year ago.
Revenue fell 11 percent from a year ago, to $20.3 billion.
The bank’s quarterly provision for credit losses was smaller than the previous quarter, at $1.4 billion in the third quarter, compared with $5.1 billion. The bank said it was expecting fewer losses in its consumer loans, but more in its commercial loans, particularly in industries hit hard by the coronavirus pandemic such as travel and entertainment.
Layoffs add to expenses
Third-quarter earnings for Wells Fargo were $2 billion on revenue of $18.9 billion.
The bank’s earnings were affected by the cost of a round of layoffs — $718 million. Another expense the bank faced in the third quarter: nearly $1 billion trying to help customers struggling to repay their loans come up with new payment plans to keep them from defaulting.
Both Bank of America and Wells said robust activity on Wall Street helped strengthen their earnings.
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Stocks were listless on Wednesday, drifting higher in early trading as investors considered another round of earnings reports from big banks.
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The S&P 500 rose slightly in early trading. Stocks in Europe were slightly lower, while shares in Asia had close the day mixed.
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The lack of direction was evident in other markets, too. Oil futures were trading were up about 0.2 percent, while U.S. 10-year Treasury notes gained in price.
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The lull on Wall Street comes after stocks surged in the first two weeks of October. Investors are watching for developments in Washington, specifically on a potential stimulus deal between Democrats and the White House, as they also worry about uncertainty around the election in November.
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In Europe, Prime Minister Boris Johnson of Britain has set a deadline of Thursday to reach a trade deal with the European Union, although there are fresh signs that the talks may continue beyond the deadline.
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Among the companies to report their results on Wednesday, Goldman Sachs rose slightly in early trading after reporting a jump in revenue from its trading business. Wells Fargo and Bank of America were both lower after their results.
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Pilgrim’s Pride, the giant U.S. poultry producer, jumped in early trading after it said it would pay more than $110 million to settle federal charges it helped fix prices on chicken. In June, the company’s chief executive and three other current and former executives at companies that supply chicken to groceries and restaurants across the United States were indicted on a price-fixing charge.
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Negotiators on Wednesday resumed discussions over a coronavirus relief package, even though Democrats and Republicans remain wildly divided over the scope and size of another stimulus bill and privately warn that another agreement may have to wait until after the Nov. 3 election.
Speaker Nancy Pelosi of California and Steven Mnuchin, the Treasury secretary, spoke on Wednesday for about an hour, discussing the language of the administration’s latest $1.8 trillion framework as compared to House Democrats’ $2.2 trillion stimulus plan, which Ms. Pelosi pushed through the House earlier this month.
They agreed to speak again on Thursday, and have their staff continue to exchange documents and language proposals.
”One major area of disagreement continues to be that the White House lacks an understanding of the need for a national strategic testing plan,” Drew Hammill, a spokesman for Ms. Pelosi, said on Twitter. “The…
Read More: Live US Economy and Stock Market Updates: Trading Lifts Wall St. Banks