'Watch Chips Today' as AI Stocks Slide, JPM Double Miss Begins Earnings Season

SPEAKER_1 (0:00)

Let us bring in Tom White, co-host of FastMarket, to help set up the action today. All right, Tom, we've got the banks rolling out, but I want to start out with your big picture take. Investors digesting the banks, also keeping an eye on the semiconductor trade. Let's start out with your big picture take today. Good morning.

Tom White (0:16)

Morning, Diane. Yeah, mixed markets here today, not surprising. You're seeing a big bump here in the Dow Industrial Average. That's because of UNH and Goldman Sachs. They're both up post earnings here. But if you look at the weakness in tech, this is kind of really sticking out to me so far this week. Today kind of boiling over from yesterday's losses in the NASDAQ 100 We were down 0.7% of a percent. We're down another nearly 0.8% of a percent this morning. This is all based on what's going on overseas. The chip trade starting to show some weakness. The Kospi was down 5.5% last night. In South Korea, we saw big losses in Samsung and SK Hynex. They make up about 50% of the Kospi at this point. It's leaking over into our markets. You take a look at some of the memory chip names. Those are the ones that are under pressure pretty significantly here today. You've got them down anywhere from 3% to 6%, whether it's Micron, Seagate, Western Digital and SanDisk.

SK Hynex down about 6%.

We saw the EWY, which is the iShares South Korea index. That's down nearly 4% this morning after falling 4% yesterday. DRAM, that ETF that covers a lot of the memory chip names, down over 4% today also. So we're seeing some pullback in some of these names that had been leading us to the upside here. Now, this might be due to some of the competition that's coming into place. CXMT, a potential China competitor coming out, saying that they're releasing new chips that are going to be more powerful, cheaper also. So that might be some of the concerns. But watch the chips today, because if those don't reverse, we might be in another choppy mixed session here today.

SPEAKER_1 (2:10)

Okay. So it almost might not matter as much, even if we see strength in the banks, as you mentioned with Goldman. But let's start out with JPMorgan Chase. They're the first to kick things off. And what's interesting is shares were initially ding right before we started talking. I saw the shares were a little bit higher. But what was through some of your takeaways here?

Tom White (2:28)

Yeah, pretty mixed quarter here. You know, a rare earnings miss on the top and bottom lines here. Just at EPS came in at $5.75 versus $5.94, since they anticipated. Managed revenue came in at about $50.9 billion. Overall revenue, about $50.2 billion. That was a slight miss.

And if you take a look at it, the stock reversed. Remember, it was down about 3% in the pre-market prior to JPMorgan coming out and saying they see fiscal year net interest income of about $106.2 billion versus estimates of about $105.3 billion. So, that immediately reversed the stock into positive territory. Now, let's break down some of the numbers. I think this is the big concern was commodity and currency trading. That FIC trading revenue came in at $5.37 billion versus about $6 billion that they estimated. That was a 10.5% miss there. Investment banking revenue came in at $3.1 billion.

We did see strength in equity trading that offset some of the loss in the FICC trading revenue. Consumer banking net income was up 13% on a year-over-year basis to nearly $5.7 billion. And asset and wealth management net income came in at about $1.84 billion. That was up 11% on a year-over-year basis. So while they missed in the top and the bottom lines, I think you have to take that into consideration when you start looking at net interest income and that commodity and fixed income trading, which was a little bit weaker. Jamie Dimon, of course, came out with his risk-averse note, but did note that each line of the business performed well and revenue increased across all of their segments at this point. And then you look at some of the things that he stated. The US economy continued to be fueled by strong business investment and ongoing consumer spending. However, here's his risk-averse. Large deficit on the fiscal side, sticky inflation, elevated asset prices and rising interest rates and geopolitical conditions continue to shift under the surface. So, while still giving a brighter outlook for the economy, he's always got to throw in some headwinds. Therefore, you know, what he believes is going on in the economy.