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Wells Fargo stock dropped 3.7% after reporting a $2.4 billion net loss for the second quarter, after setting aside $9.5 billion to cover potential and actual loan losses. The bank also slashed its dividend to 10 cents a share from its previous level of 51 cents.
The bank, among the United States’ biggest mortgage lenders, reported a net loss of $2.4 billion, or 66 cents per share, for the quarter ended June 30, compared with a profit of $6.2 billion, or $1.30 per share, in the year-earlier period.
U.S. lenders began building up reserves in the first quarter to cover defaults from consumers and companies as the COVID-19 pandemic slammed the brakes on the economy, but with cases again surging the scale of the likely losses remains anyone’s guess.
Wells Fargo, which reported its first quarterly loss since December 2008, set aside $9.57 billion in credit loss provisions in the second quarter of the year, up from $503 million a year earlier.
The San Francisco-based bank also cut its dividend for the third quarter to 10 cents per share from 51 cents previously to reflect the U.S. Federal Reserve’s recent curbs on bank dividends..
Net interest income fell 18% from the prior period, as interest rates have fallen to near zero. Total revenue fell to $17.84 billion from $21.58 billion a year earlier.
Wells Fargo & Co shares are down 52% from the beginning of the year, still down 53.59% from its 52-week high of $54.75 set on November 29, 2019. They are under-performing the S&P 500, which is down 2.34% from the start of the year.
On the technical front, the RSI is at 40.37% and suggests that the market can move in a downward direction. The current price is trading below all the Moving Averages. The current price is below the middle band of the Bollinger Bands and is heading downwards. The stochastic is forming an upside crossover.
Overall Bias is Negative and Short-term trades can be initiated with below mentioned Stop Loss and Profit targets.
Trade Suggestion –Short Sell At 24.35 Take Profit At 22.00 Stop Loss At 25.35