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US stock markets enter correction, investment bank profits grow

The US stock market is officially in a technical correction with all three benchmarks falling again overnight.

The Dow Jones underperformed once again, down 1.0%, the S&P 500 down the same and the Nasdaq dropping 1.1%.

The key driver was another day of reporting season dominated by the investment banks, which make up a large portion of the index.

Bank of America shows strength

Bank of America (NYSE: BAC) was the highlight, reporting a 29% increase in profit on a 10% increase in revenue.

Most importantly, net interest income was significant higher as both loans and deposits continued to surge.

Consumer banking grew earnings by 8%, and wealth management income hit a record after adding 16%. Bank of America shares were up 0.4%.

Morgan Stanley’s earnings beat

Morgan Stanley (NYSE: MS) also beat estimates with profit up 10%, as the investment bank benefitted from a surge in acquisition and trading activity. Morgan Stanley shares finished the session 1.9% higher.

Proctor and Gamble upgrades

Proctor & Gamble (NYSE: PG) gained 3.4% as the maker of Gilette razors and other consumer brands reported a 6% organic increase in sales and upgraded earnings expectations for 2022.

In a worrying sign, management warned of significant cost headwinds, including US$2.3 billion in input costs and US$300 million in freight.

Back home on the ASX, the S&P/ASX 200 (ASX: XJO) is set to buck the negative lead from US markets to edge higher this morning. For a round-up of the latest news, check out my ASX 200 morning report.

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