Market Overview

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

Big Banks Do Their Part For Q1 Earnings; Will Others Follow?
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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 $25 million of his own stock in mid-February), many are still well off their 2016 highs.

The reason for this is twofold:

  • The newly formed dovish stance taken by the Fed, has dimmed the prospect of future interest rate hikes that would benefit the sector.
  • 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. There was the casualty in this sector this week as Peabody Energy, a company that has been in existence since 1883, filed for bankruptcy.

Earnings So Far

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, JPMorgan Chase & Co. (NYSE: JPM) and Citigroup Inc (NYSE: C) came in solid Q1 beats and Bank Of America Corp (NYSE: BAC) rallied off its inline results do to cost-cutting measures that exceeded Wall Street expectations.

Related Link: What Is The Oil Market Expecting From Global Producers Meeting? Not Much

As a result, JPMorgan shares have added over $4 to $62.04, Citigroup shares have added over $5 to $45 and Bank Of America shares have added over $1 to $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 for the market to determine if can maintain its monster gains off the February and push to new all-time highs.

Whereas 62 companies reported Q1 results this week, next week nearly 700 companies will report, covering a much broader spectrum of the economy than the financials.


On Monday, investors will see some of its first results from the technology sector as International Business Machines Corp (NYSE: IBM) reports. Pepsico (NYSE: PEP) will give the Street some potential insight into consumer staple sectors. More of the same on Tuesday, as Intel Corporation (NASDAQ: INTC) and Johnson & Johnson (NYSE: JNJ) will report results.

On Wednesday, investors will have to the digest all of the earnings report from Abbott Laboratories (NYSE: ABT), American Express (NYSE: AXP), Boeing (NYSE: BA) and The Coca Cola Co (NYSE: KO).

Followed on Thursday by a variety of different companies, including Caterpillar (NYSE: CAT), General Motors (NYSE: GM), Altria Group (NYSE: MO), Verizon Communications (NYSE: VZ) and Visa (NYSE: V).

The earnings parade lightens up a bit on Friday, but the Street will still get results from General Electric (NYSE: GE) and Honeywell (NYSE: HON).

Market Talk

With the S&P 500 index up some 15 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, then indexes have once again tested the upper portion of a trading range that has persisted for the most part since May 2014 without a breakout to the upside.

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