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Goldman Sachs: Major Volatility Ahead for Big Stocks As Earnings Season Kicks Off

January 14, 2019

Earnings season for a large number of publicly traded companies kicked off on Monday.

New data compiled by Goldman Sachs shows a 7.4% average implied move on S&P 500 stocks upon the release of their earnings, with stock prices expected to swing in either direction.

The data shows the highest implied average price moves since the financial crisis, reports CNBC.

“‘While higher implied moves make it more costly to buy options to position for earnings events, it also indicates a high degree of nervousness that tends to precede bullish moves in stocks on earnings events,’ John Marshall, a derivatives strategist at Goldman Sachs, wrote in a note Sunday.”

Citigroup, the third largest US bank, says its net income year-on-year for the fourth quarter rose to $4.3 billion from a net loss of $18.9 billion during the same period the previous year, driven by a reduction in expenses, lower cost of credit and a declining effective tax rate, according to a company statement on Monday.

The profit translates to $1.64 per diluted share, on revenues of $17.1 billion.

The earnings for the recent quarter include a one-time, non-cash charge of $22.6 billion, or $8.66 per share, recorded in the tax line related to the enactment of the Tax Cuts and Jobs Act (Tax Reform). It also included a one-time benefit of $94 million, or $0.03 per share.

JPMorgan Chase and Wells Fargo are scheduled to report their earnings on Tuesday, followed by Goldman Sachs and Bank of America on Wednesday, and Morgan Stanley on Thursday.

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