Stock week ahead: Big banks are booming. Now the revenue comes here

The bank shares have had a solid start to 2022, which extends the rise from the second half of last year.

The Invesco KBW Bank ETF (KBWB), which has Bank of America (BAC), Wells Fargo (WFC), JPMorgan Chase (JPM), US Bancorp (USB) and Citigroup (C) as a top stock, is up more than 8% already this year and has increased by more than 1[ads1]9% in the last six months. It is better than the wider market.

JPMorgan Chase, Citi and Wells Fargo will tell investors how they did during the fourth quarter and what to expect in 2022 when they report earnings on Friday.

The housing market does not decline immediately
US Bancorp and Bank of America will announce their earnings on Wednesday, January 19th. The same goes for the investment bank power plant Morgan Stanley (MS). Goldman Sachs (GS) will report earnings on Tuesday 18 January.
Banks will profit from rising interest rates, provided they do not rise too fast and hurt the demand for mortgages, credit cards and other loans. Although higher interest rates make lending more profitable for banks, there is a limit to how high interest rates can go before they cool the red-hot housing market.

Financial institutions are also flourishing thanks to the boom in the stock market, which has helped to increase trading activity. The increase in shares has also led to increased demand for mergers and IPOs, and led to a jump in lucrative investment bank fees.

Together, the trends can increase the bank’s earnings. Analysts predict that JPMorgan Chase’s earnings per share rose almost 70% in 2021.

Wall Street also predicts significant profit increases for Citi, which is now under the leadership of new CEO Jane Fraser and Wells Fargo, which is finally starting to recover after years of poor results due to the scam with fake accounts.

But investors want to hear what these banks have to say about the rapidly spreading Omicron variant of the coronavirus and how it could affect markets and the economy for the rest of the year.

Several top Wall Street companies, including JPMorgan Chase, Goldman Sachs and BlackRock, have delayed plans to get their workers back on the trading floors, despite pressure from Eric Adams, the new mayor of New York City, to get people back to Big Apple Offices.

Investors will also be curious to hear what JPMorgan Chase CEO Jamie Dimon and other top bank executives have to say about the recent rise in long-term bond yields.

There are concerns that the Federal Reserve may raise interest rates more aggressively than expected this year to curb inflation. If that happens, it could set freezes in both the housing and stock markets.

All eyes on the economy

When we talk about inflation, the US government will report the consumer price index for December on Wednesday.

The CPI rose by 6.8% during the 12 months ending in November to its highest level in almost four decades. Even after excluding volatile energy and food prices, core inflation was up 4.9% last year to the highest level since June 1991.
The market is worried that inflationary pressures may not ease immediately. The Fed now appears to be sharing these concerns. The central bank raised its forecasts for total and core price increases for 2022 at its meeting last month.
The minutes from the Fed’s December meeting showed that the central bank was concerned about “surprisingly high inflation” due to “long-term supply bottlenecks”.
Still, US consumers continue to spend money, although higher prices may be pushing some budgets. The government will publish retail sales figures for the crucial holiday month of December on Friday.
Retail sales shot up more than 16% during the 12 months ending in November, but growth slowed from October to November.


Monday: United States wholesale; Tilray (TLRY) earnings; Tokyo Stock Exchange closed for market holiday
Tuesday: Brazil consumer inflation; Albertson’s earnings
Wednesday: US CPI; Jefferies (JEF) and KB Home (KBH) earnings
Thursday: US unemployment claims and producer prices; Delta Air Lines (FROM) and Taiwan semiconductor (TSM) earnings

Friday: American retail, industrial production and consumer sentiment (U. of Michigan); JPMorgan Chase, Citigroup, Wells Fargo and BlackRock revenues

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