Earnings kickoff
Get ready for the coming flood of corporate earnings, with the top banks on Wall Street ready to kick off the festivities. For investors in the sector, guidance may be as important as the results, with markets now factoring in less rate cuts (if any) for 2025. Interest rates remain relatively elevated despite the Fed cutting rates by 100 basis point over the past quarter, which could help drive banks’ closely watched net interest income, along with loan growth and a strong economy.
Mark your calendar: Coming up this morning are Q4 earnings from JPMorgan (JPM), Goldman Sachs (GS), Citigroup (C) and Wells Fargo (WFC). They’ll be followed tomorrow by the quarterly numbers from Morgan Stanley (MS) and Bank of America (BAC). There’s also a whole host of regional players, asset managers, credit card companies and other financial institutions reporting over the next week. See the full list on Seeking Alpha’s earnings calendar.
Big bank stocks have significantly outperformed the market over the past year, climbing around 46% on average, or over double the 22% return of the S&P 500 (see the chart below). The Fed pivot helped bolster the sector, as well as the election of Donald Trump to the White House. Investors are now banking on a lighter regulatory environment and business-friendly agenda, which can result in a pickup in loan originations, an IPO comeback, and more investment banking revenue amid strong M&A.
What to watch: Even those not invested in the banking industry will be closely watching the upcoming results. Non-interest revenue will detail the state of capital markets activity, while provisions for credit losses can provide a window into how well banks expect the economy to hold up. Consumer spending will also be in the spotlight, and don’t forget comments on the macro situation – or recent trends like rising bond yields – from some of the biggest CEOs on Wall Street.
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