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The fourth-quarter earnings season began in earnest Friday, but Wall Street's latest performance metrics did little to invigorate the bulls and saw the Dow Jones Industrial Average finish in the red.
A bevy of blue-chip financial stocks put up mostly strong Q4 headline numbers before the opening bell, but other factors contributed to mixed results in their shares.
Wells Fargo (WFC, +3.7%) reported an 86% year-over-year pop in quarterly net income, while revenues and earnings per share both topped analyst expectations.
Dow component JPMorgan Chase (JPM, -6.2%) delivered similar beats on the back of a 28% jump in investment-banking revenues, but investors turned tail after CFO Jeremy Barnum said in a conference call that the company likely will fall short of its 17% target for returns on capital thanks to headwinds including higher expenses and stabilizing trading revenue.
Citigroup (C, -1.3%) exceeded top- and bottom-line estimates, too, though Q4 profits were off by 26%.
Also weighing on sentiment was a wide miss by December retail sales, with a 1.9% month-over-month decline coming in far worse than expectations for a mere 0.1% slip.
"The bulk of this decline came from the control group (core) category, with sales down a sharp 3.1% month-over-month," says Barclays economist Pooja Sriram. "These prints follow from downward revisions to the November data, and in our view, suggest a stronger pull-forward of sales into October, as households likely accelerated their Christmas shopping in view of widespread warnings in the press about goods shortages and shipping delays."
But she adds that it's hard to attribute all of December's decline to this effect.
"Instead, we believe there are likely transitory effects on demand at play, due to the Omicron variant, which likely affected spending on categories such as restaurants and in-store purchases," she says, adding that elevated inflation and waning government transfers have also weighed on households' inflation-adjusted disposable incomes.
"The retail sales number was ugly, there's no getting around it, especially since these numbers are nominal and not adjusted for inflation," says Cliff Hodge, Chief Investment Officer for Cornerstone Wealth, adding that "it's tough to say how much of the miss is related to inflation impacts."
The Dow took the worst of it, dropping 0.6% to 35,911. The S&P 500 managed a marginal gain to 4,662, and the Nasdaq Composite posted a decent 0.6% improvement to 14,893. All three indexes finished in the red for the full week.
A reminder: The stock market is closed Monday, Jan. 17, in observance of Martin Luther King Jr. Day.
Other news in the stock market today:
The small-cap Russell 2000 managed a 0.1% improvement to 2,162.
Growing tensions between Russia and Ukraine helped drive up U.S. crude oil futures, which settled 2.1% higher to $83.82 per barrel.
Gold futures settled 0.3% lower at $1,816.50 per ounce.
Bitcoin managed to squeak out a 0.7% improvement to $43,125.86. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
Sherwin-Williams (SHW, -2.8%) was another earnings loser Friday. The company announced preliminary Q4 earnings results that were below what Wall Street was looking for. The company expects to earn $1.35 per share on revenues of $4.76 billion during its Q4, but the pros are looking for EPS of $1.69 on sales of $4.77 billion. Moreover, the company is now looking for full-year profits of $8.15 per share, which is lower than both its previous guidance of $8.35 to $8.55 per share, and analyst expectations for $8.48.
What Does 2022 Have in Store for Crypto?
The adrenaline junkies among us might want to keep a close eye on cryptocurrencies in 2022.
The asset class is coming off a transformative 2021 – one that saw digital coins ascend from small, speculative investments to … well, much larger, but still predominantly speculative investments. Cryptocurrencies ballooned from an $800 billion collective market cap at the start of 2021 to $2.25 trillion by year's end, so roughly a triple in a short 12 months' time.
We've already explored the best opportunities in stocks, exchange-traded funds (ETFs) and mutual funds for the year ahead; as we near the end of our annual previews, we turn toward crypto. Will digital currencies have nearly as productive a 2022 as last year? And if so, which coins are likeliest to drive those gains?
Read on as we explore the outlook for cryptocurrencies in 2022.