Big Banks Do Their Part For Q1 Earnings, Will Others Follow?

A definite laggard in the market's recent rally, that has taken the broad market to new highs for the year, has been the financial sector. Although, they have come off their February lows, led for the most part by the confidence instilled in sector by Jamie Dimon (who purchased 25M of his own stock in mid February), many are still well off their 2016 highs. The reason for this being is twofold, First of all , the newly formed dovish stance taken by the Fed, has dimmed the prospect of future interest rate hikes that would benefit the sector. More importantly, the potential exposure to debt held by the banks from companies in the energy sector has not been alleviated despite the recent rally in Crude Oil prices. In fact, there was the casualty in this sector this week as Peabody Energy, a company that has been in existence since 1883 file for bankruptcy this week. Whether this is one off or not will be determined in the upcoming months. Despite this doom and gloom surrounding the sector, a few of the big banks have come through with Q1 earnings above the Street's lowered expectations. For example, JP Morgan and Citigroup came in solid Q1 beats and Bank Of America rallied off its inline results do to cost-cutting measures that exceeded Wall Street expectations. As a result, JP Morgan (NYSE JPM) shares have added over $4 at 62.04, Citigroup

shares have added over $5 at $45.45 and Bank Of America

shares have added over $1 at $14.06. Therefore, the early results of the Q1 earnings season has been a mild victory for the bulls. However, it has just begun and next week will pivotal to market to determine if can maintain its monster gains off the February and push to new all time highs. Whereas only 62 companies reported Q1 results this week, next week earnings season kicks into full gear with nearly 700 companies will report. Also, the companies reporting will cover a much broader spectrum of the economy than the financials. On Monday, investors will some of its first results from the technology sector as International Business Machines

reports. Also, Pepsi

will give the Street some potential insight into consumer staple sectors with their earnings report. More of the same on Tuesday as Intel Corp

and Johnson & Johnson

shares (who should benefit from a weaker dollar over the last few months) will report results. On Wednesday, investors will have to the digest all of the earnings report from Abbott Labs

, American Express

and Coca Cola

. Followed on Thursday by a variety of different companies including Caterpillar

, General Motors

, Altria Group

, Verizon Communications

and Visa

. The earning parade lightens up a bit on Friday, but the Street will still get results from General Electric

and Honeywell

. Of course, the Street will have to wait until the following week to hear from some of the big guns, like Apple

on April 25 and Alphabet Inc.

on April 19, it will be interesting whether or not this trend of Q1 beats continues. With the S&P 500 index up some 20 percent from its February lows and with many non-believers an all-around strong Q1 may ignite a stampede into stocks. That coupled with a still accommodative Fed, could easily push the indexes to new all time highs. If not, than indexes have once again tested the upper portion of a trading that has persisted for the most part since May 2014 without a breakout to the upside. .