Strong bank earnings, bad loans, spinoff prep, and Dreamforce wrap
The stock market has rebounded this week following U.S.-China trade, the ongoing federal government shutdown and credit concerns. For the week, the S&P 500 and tech-heavy Nasdaq gained 1.7% and 2.1%, respectively, before each lost more than 2% the previous week. Towards the end of the week, trade and closure caused concerns about regional banks to take a backseat, and these concerns were reflected in the market. Zion and Western Alliance disclosed bad loans over a two-day period, sparking a sell-off in financial names on speculation of cracks in credit quality. Shares of Zion and Western Alliance lost 13% and nearly 11%, respectively, following Thursday’s announcements. The two stocks clawed back some of their losses on Friday as investors claimed the two situations were one-offs and not part of a larger crisis emerging. .SPX .IXIC 5D Mountain Wall Street companies tied to U.S. consumer health, such as the S&P 500 and Nasdaq’s weekly performer credit card issuer Capital One, were hit the hardest. Club name Capital One fell 5.5% on Thursday but later rebounded 4% in one session, translating into weekly gains. Wells Fargo, one of the giants of consumer banking, fell on Thursday and Friday; perhaps more to cash in on credit concerns after the club’s shares rose more than 7% on Tuesday following a strong earnings report. Goldman Sachs and BlackRock also announced their quarterly results on Tuesday. Wells Fargo Wells Fargo performed well on both the top and bottom lines in the third quarter. Wells Fargo also increased its return on tangible equity (ROTCE) target, one of the most important profitability metrics for a bank. Wells Fargo now targets a ROTCE of 17% to 18%; This is higher than the previous target of 15%. The club raised its price target on Wells to $92 per share from $90 per share and reiterated its “hold equivalent 2” rating on the stock as a result. On a weekly basis, the stock gained 7.3% in value. WFC YTD mountain Wells Fargo YTD “What a difference a quarter can make. When Wells Fargo reported second-quarter results in July, Wall Street’s financial forecasts were too optimistic following a cut in the net interest income (NII) outlook, and management was not moving quickly enough to create opportunities following the removal of the Federal Reserve-imposed asset cap. The stock that day It fell more than 5% to $78.86, and quickly “We bought the pullback because of our long-standing belief in CEO Charlie Scharf,” Jeff Marks, director of portfolio analysis at the Investment Club, said in Tuesday’s earnings call. He continued: “Fast forward to today, shares are up more than 7% in response to a strong quarter and are trading near all-time highs. The results weren’t perfect — for the third quarter in a row, Wells Fargo missed the consensus estimate for NII, a crucial source of revenue for traditional banks. However, when management left its full-year outlook unchanged and offered above-expected fourth-quarter NII guidance Investors breathed a sigh of relief. Street. “This made the market courageous about 2026.” Goldman Sachs Goldman Sachs achieved record revenue in the third quarter, driven by superior performance in its deal-making division. Goldman’s investment banking fees increased 42% compared to the same period last year. Still, shares tumbled in Tuesday’s report for no clear reason. The club also upgraded Goldman to a buy-equivalent rating of 1. We also increased our price target from $750 to $850. For the week, Goldman shares fell 1.8%. GS YTD high Goldman Sachs YTD “This was a very strong quarter for Goldman Sachs, and any persistent weakness in its shares should be viewed as a buying opportunity. Although expenses were slightly higher than expected, that’s not concerning given the strong third-quarter revenue and earnings. More importantly, the top metrics that financial investors use to rate companies are all above expectations. beyond,” wrote the club’s portfolio analyst Zev Fima. “With initial public offerings, mergers and acquisitions set to improve further next year, and deregulation seen as a tailwind, we see plenty of room for Goldman shares to rally.” BlackRock BlackRock followed suit on Tuesday with a better-than-expected quarterly performance. Shares rose that session as Wall Street saw BlackRock’s pursuit of growth outside of low-cost stock and bond funds paying off. This included an increase in organic base fees, which CFO Martin Small attributed in part to iShares Bitcoin and Ethereum exchange-traded funds. During Tuesday’s morning meeting, Jim Cramer said BlackRock was the “dream quarter” where we bought shares in the first place. The club maintained its hold-equivalent 2 rating while raising its price target to $1,300 from $1,200. The stock rose 2.5 percent for the week. BLK YTD mountain BlackRock YTD That wasn’t the only positive news BlackRock received this week. On Thursday, CNBC first reported that BlackRock was overhauling one of its money market funds to cater to stablecoin issuers. The revamped fund, called the BlackRock Select Treasury-Based Liquidity Fund (BSTBL), is aligned with the GENIUS Act, a landmark piece of legislation that puts federal guardrails around stablecoins for the first time. Another advantage of BSTBL: The fund is designed to have greater liquidity than its previous version and provides additional access by extending the transaction time. Abbott Labs It wasn’t just financial stocks releasing earnings reports this week. Abbott Laboratories posted another underwhelming quarter on Wednesday. The diversified healthcare company continued to disappoint us. The club also lowered our price target from $145 to $140. We also reduced the medtech name from 2 to 3, which means we will consider selling to our strength. That’s exactly what we did on Thursday, completely exiting our Abbott position. From the sale, the Club gained approximately 24% from the shares purchased last year. For the week, Abbott lost 3%. Honeywell, DuPont Honeywell and DuPont, two of our industrial companies, announced new stock distribution details on Thursday ahead of their respective subsidiaries. In the case of DuPont, shareholders of record as of Oct. 22 will receive one share of its soon-to-be-spun off electronics division, Qnity, for every two shares of DuPont on Nov. 1. Qnity and DuPont will begin trading as separate stocks on November 3. On Monday, we published an analysis of what investors should expect after Qnity’s departure next month. Two days later we published a follow-up study of what was left of DuPont. DuPont on Friday named the idea of buying a short-term catalyst in Deutsche Bank ahead of the split. DuPont is trading at a 38% discount to its estimated sum of its parts, analysts said. DuPont was up 8% for the week. As of Oct. 17, Honeywell investors will receive one share of the Solstice Advanced Materials unit for every four Honeywell shares on Oct. 30. Later in the same session, Solstice will then begin trading independently under the ticker symbol “SOLS”. Honeywell will continue as “HON”. Then, in the second half of 2026, the industrial conglomerate will separate its remaining automation and aerospace businesses into separate companies. Here’s a breakdown of what investors should expect from the upcoming Solstice split. Honeywell shares returned 1% higher for the week. Salesforce Salesforce shares managed to post weekly gains during Dreamforce week. Strong gains on Monday before the event began – and then again on Thursday following a positive long-term forecast – carried the week. Late Wednesday, Salesforce outlined a multi-year financial roadmap. The company was forecasting $60 billion in annual revenue for fiscal 2030, excluding the pending Informatica deal; this was above LSEG’s consensus of $58.4 billion. The news sent Salesforce shares surging as management rejected Wall Street’s narrative of slow revenue growth in 2025, which negatively impacted investor sentiment. “This is old Salesforce, and I was waiting for old Salesforce,” Jim said Thursday. 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