Shares of Wells Fargo (NYSE:WFC) fell close to 3% after the company reported its second-quarter results, which were largely in line with Street expectations. The investment bank’s net income rose to $6.2bn, or $1.30 per share, from $5.2bn, or 98c per share, a year earlier, which was in line with analysts’ expectations. Revenue, unchanged at $21.6bn, came in higher than Street expectations of $20.9bn while net interest income (NII) fell 3.6% to $12.10bn, slightly below the $12.20bn projected by experts.
However, in the post-earnings conference call with analysts, CFO John Shrewsberry cut the NII outlook for 2019 by almost 5%, citing a change in the interest rate-setting. This comes after he stated a 2-5% fall in the NII guidance just three months back, which triggered a sell-off in the stock. While the NII guidance is based on expectations of 1-2 interest rate cuts this year, markets are anticipating the Fed to slash interest rates by 75 basis points via three rate cuts.
Shares of Wells Fargo have tumbled on the result day for the last three quarters in a row, and in nine out of the last ten quarters. The stock is down 1.7% year to date compared to the more than 18% gains in the SPDR Financial Select Sector ETF.
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