Big Oil Sets the Stage for a Big Quarter
Jan 11th 2013 3:34PM
Updated Jan 11th 2013 4:50PM
Stocks have traded in a narrow range today as news gives investors little courage to buy or sell big. As of 3:20 p.m. EST, the Dow Jones Industrial Average is up just nine points, while the S&P 500 is down less than a point.
The biggest economic news of the day was the U.S. Department of Commerce announcing that the trade gap widened 16% to $48.7 billion in November, but that's not necessarily a sign of doom and gloom, because imports and exports can swing wildly month to month. JPMorgan's analyst did cut fourth-quarter growth estimates from 1.5% to 0.8%, but until we hear actual numbers, I wouldn't be too alarmed.
Chevron was one of the more notable movers today, gaining 1.1%. Management said earnings would be "notably higher" than the $2.69 per share it earned in the third quarter. Production of liquids and natural gas were up both in the U.S. and abroad through the first two months of the quarter, which will drive results. The price of oil and natural gas has increased over the past few months, and with economic stability returning in the near term, integrated oil companies should do well.
The banking sector was a bit uneasy today after Wells Fargo reported fourth-quarter earnings. The company posted a strong net income of $5.1 billion, or $0.91 per share, beating estimates. But investors are reading between the lines today. The company's interest margin -- a measure of interest income minus interest expense divided by assets -- fell from 3.89% a year ago to 3.56% last quarter. Wells Fargo's shares have fallen 1.4% as a result, while Bank of America and JPMorgan are down 1.4% and 0.3%, respectively.
Wells Fargo is big in the mortgage business, so the lower margin is a concern, but Bank of America's business is even more leveraged to mortgages, so that's why the stock is down big today. The good news is that Wells Fargo CEO John Stumpf said there's "no doubt" that housing has turned the corner, so in the long term, these stocks should be in good shape.
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The article Big Oil Sets the Stage for a Big Quarter originally appeared on Fool.com.Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. The Motley Fool recommends Chevron and Wells Fargo & Company. The Motley Fool owns shares of Bank of America, JPMorgan Chase & Co., and Wells Fargo & Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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