Wells Fargo (WFC, $41,13) was on the losing side of last week's earnings. The bank reported its second quarter results on Friday, missing big on both top and bottom line expectations from analysts.
Q2 earnings for the bank came in at $3.12b, which is nearly a 50% decline from the $6.04b Wells Fargo earned in the second quarter of last year. Earnings per share were reported as $0.74, less than the expected $0.80.
What drove Wells Fargo’s massive drop in earnings? One driving factor was a huge decrease in mortgage income, which fell by 79%. Executives from Wells Fargo warned investors that they expect to see further challenges over the next few quarters due to rising interest rates and a slowdown in borrowing.
Why it matters
With recession fears looming, economists are looking at the housing market as an indicator of economic health. As the bank that's most exposed to the housing sector, Wells Fargo's earnings miss is a bad sign for the state of the overall economy.
