Bank Earnings Show U.S. Economy Is Holding Up

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Alex Ossola (0:33)

Earnings from America's biggest banks show the US economy is still going strong. Plus, US stocks continue their gains, with the NASDAQ hitting its longest winning streak in years.

And why Amazon is buying a rival to Elon Musk's satellite network, Starlink.

Patience Haggin (0:48)

Starlink is way ahead of Amazon in the satellite connectivity business. When Amazon gets control of Globalstar, they'll get a pretty big boost on the way up towards competing with Starlink.

Alex Ossola (0:59)

It's Tuesday, April 14th. I'm Alex Ossola for the Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today.

The biggest US banks are reporting earnings this week, and they've got good news. American households and businesses are holding up. Today, JPMorgan Chase, Citigroup, and Wells Fargo said customers continued to spend, borrow, and invest in the first quarter, even as war broke out in the Middle East and investors worried about risks from inflation, AI, and turmoil in private credit funds. The three banks earned a collective $27.5 billion in the first quarter, up 17% from a year earlier.

In his most recent newsletter, WSJ investing columnist Spencer Jakab says there's reason to think that these good results won't just be limited to the banking sector, even though consumers are showing some signs of strain. Spencer, where might we be seeing these strong earnings?

Spencer Jakab (2:00)

It was generally a good quarter for Wall Street banks for sure, but overall, it's likely to be a very good earnings season. Probably the best quarter for growth since 2021, which to put that in perspective, that's more we were still rebounding from the pandemic contraction in the economy. While a blowout quarter, a very good quarter for a company, can definitely lift its stock, people are very nervous about what lies ahead, and they listen very carefully to what executives say to analysts and investors on the call.

That's a bit of a mixed bag looking forward.

Alex Ossola (2:31)

Are we expecting there to be some differences in different sectors and industries as they're reporting their earnings?

Spencer Jakab (2:37)

We definitely are. The really interesting thing is looking at consumer facing companies, look at McDonald's or look at Walmart or look at Darden Restaurants that owns Olive Garden, talk to a cruise line. Those are companies that are directly affected by the energy shock and the shock to confidence. Last week you had the University of Michigan put out the most pessimistic report on consumer sentiment in its entire 74 year history. Of course, sentiment doesn't necessarily translate to dollars, but that's not a great sign.

Alex Ossola (3:04)

That was WSJ investing columnist Spencer Jakab. In other earnings news, BlackRock, the world's largest asset manager, says net income rose by 46% to $2.2 billion on higher investment fees, beating analyst expectations. Johnson & Johnson reports that revenue grew almost 10% to about $24 billion. The health care company's strong cancer drug sales offset a steep decline from one of its best-selling drugs, Stellara. J&J lifted its forecast for the year.

And BP said today that it expects an exceptional oil-trading result for the first quarter, with the war in the Middle East fueling market volatility. It will report its full earnings later this month.

Amazon has agreed to buy satellite operator Globalstar in a roughly $11 billion deal. Amazon wants to build a business connecting consumer smartphones via satellite internet. And Patience Haggin, who covers telecoms for the journal, says this acquisition should help Amazon compete with the dominant satellite internet network, Elon Musk's Starlink.

Patience Haggin (4:10)

Starlink is way ahead of Amazon in the satellite connectivity business. Starlink already powers broadband internet today by satellite. It also provides cell service by satellite through a partnership with T-Mobile.

Amazon is buying Globalstar to boost this business. Globalstar is already providing this kind of connectivity for Apple services that let you text emergency services for help when you're in an area with no cell service. When Amazon gets control of Globalstar, they'll get a pretty big boost on the way up towards competing with Starlink.

Alex Ossola (4:47)

The owner of the Pittsburgh Post-Gazette is selling the newspaper to the nonprofit that owns the Baltimore banner. Ohio-based Block Communications had planned to close the Post-Gazette next month because of financial losses. Terms of today's deal weren't disclosed.