Led by another day of gains for the financial services sectors, stocks were able to cobble together modest gains Thursday with the S&P 500 inching up 0.02%. The Dow Jones Industrial Average rose 0.1% while the Nasdaq Composite lost 0.03%. Financial services names are the second-largest sector weight in the S&P 500 behind technology.
It was another big day of earnings from major U.S. banks, which we address below, with prominent themes being slack revenue, plenty of cost-cutting and concerns about exposure to sour energy debt. Economic data revealed some good news among consumers, which account for about two-thirds of the U.S. economy.
While stocks were choppy most of Thursday, standout performances came from 3D Systems Corporation (NYSE:DDD), Baker Hughes Incorporated (NYSE:BHI) and Bank of America Corp (NYSE:BAC).
3D Systems Corporation
Shares of 3D printing firm 3D Systems soared 10.1% on volume that was about triple the daily average after Bank of America Merrill Lynch upgraded DDD to “buy” from “underperform.” That is a two-notch upgrade, a rarity among sell-side analysts, and the bank put a $26 price target on DDD, implying significant upside from Thursday’s closing levels.
BofA Merrill Lynch’s price target on DDD is the highest among all analysts, according to Zacks.
The bank cited the arrival of new CEO Vyomesh Joshi as one of the catalysts for DDD shares going forward.
Bank of America Corp (BAC)
Bank of America, one of the largest U.S. banks, rose 2.5%. BAC helped drive another day of gains for the financial services sector despite reporting an 18% drop in first-quarter profits.
“Revenue in five of BofA’s six main businesses fell, pulling down total revenue below Wall Street’s expectations. Only consumer banking grew,” reports Reuters.
BAC earned 20 cents a share in the first quarter, matching analysts’ estimates. Revenue of $19.57 billion missed Wall Street forecasts calling for $20.2 billion. BAC’s total provisions climbed to nearly $1 billion at the end of the first quarter, but the company said it is comfortable with its reserves for sour energy loans.
Baker Hughes Incorporated (BHI)
Oil services provider Baker Hughes climbed 4.6% on heavy volume following reports that the company and Halliburton Company (NYSE:HAL) are in talks to sell assets to private equity firm Carlyle Group that could be valued at more than $7 billion.
The talks are reportedly advanced. HAL has been trying to acquire BHI, but regulators have heavily scrutinized the deal on concerns that the combined company would eliminate competition in the oilfield services industry.
Earlier this month, the Justice Department sued to block HAL’s takeover of BHI. HAL would owe BHI $3.5 billion if it walks away from the deal.
At the time of this writing, Todd Shriber did not own any of the aforementioned securities.
