In advance, economists had expected that retail trade in the United States would weaken by a modest 0.1 percent from November to December. Instead, seasonally adjusted turnover fell by 1.9 per cent, and the statistics for November were also downgraded. Excluding cars and fuel, the decline was even greater, as much as 2.5 percent. The miserable development was due to both a lack of new “stimulus checks” and last month’s extensive corona infection. Paradoxically, e-commerce fell sharply.
The fact that some board members of the US Federal Reserve the day before talked about an interest rate hike already in March helped to dampen investors’ risk appetite. As a result, most stock markets were down significantly by four o’clock on Friday.
JPMorgan Chase did particularly poorly. The share price was down more than 5 percent on Friday afternoon, even though the USA’s largest bank presented surprisingly strong top and bottom line figures for the fourth quarter. One explanation is that a large part of the earnings was due to the reversal of $ 1.8 billion in previous loss provisions. In addition, operating expenses increased by 11 per cent, despite the fact that revenues were virtually unchanged from the same period the year before.
For rival Citigroup, the price drop was almost 3 percent. Here, sky-high cost inflation contributed to earnings plunging 26 percent from the fourth quarter of 2020. However, revenues of $ 17 billion were $ 250 million more than expected.
Wells Fargo also presented a brand new account. Unlike JPMorgan and Citigroup, this bank focuses more on traditional lending activities in the US domestic market. Again, the top line surprised positively, and also top manager Charles Scharf said that the demand for loans picked up in the second half of last year. While the other two financial giants experienced lower profitability, Wells Fargo increased its net profit by 86 per cent from the same period last year. Earnings per share were around 10 per cent better than expected, and the share price was up close to 2 per cent on Friday afternoon.
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