Early Tuesday morning, five of the six largest banks in America reported earnings around the same time... All five beat analyst expectations. All five posted strong revenue growth. And all five benefited greatly from the same tailwinds.
This Bank Makes Financial History... Again
By John Evelius, junior analyst, Chaikin Analytics
Early Tuesday morning, five of the six largest banks in America reported earnings around the same time...
All five beat analyst expectations. All five posted strong revenue growth. And all five benefited greatly from the same tailwinds.
Over the past several months, the financial industry has enjoyed surging equity markets, a record IPO season, and a consumer who kept spending. This is not a new trend, either.
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Making $21.2 Billion in Three Months
Folks, unless you've been ignoring financial news this week, you know that I'm talking about JPMorgan Chase (JPM).
JPMorgan earns income through three main areas – markets, investment banking, and consumer lending.
Without a doubt, the strongest driver this quarter was the trading floor. Equity-trading revenue jumped 86% year over year to more than $6 billion.
In fact, total market revenue hit $12.1 billion, topping its own all-time trading record set just three months ago.
JPMorgan's investment-banking segment also saw a record surge, with revenue jumping 45% to $3.9 billion – the highest it has been since 2021. This rise was driven by strong equity underwriting, debt issuance, and advisory work.
The consumer-credit arm held up as well. Net interest income hit $25.62 billion, up 10% year over year. And credit-card charge-off rate guidance came in lower than last quarter. This means that the American borrower is in better shape than expected.
Folks, all of this added up to earnings per share ("EPS") hitting $7.70 – soundly beating analyst estimates of $5.85.
The other four banks reporting also had strong quarters. Wells Fargo's (WFC) EPS came in at $2 against a $1.72 estimate.
Goldman Sachs (GS) blew analysts' estimates out of the water with a $20.98 EPS against $14.48. This, combined with a 23.5% return on equity, gave Goldman one of the strongest quarters in the firm's history.
Now, we don't have time to discuss in-depth numbers for all of these banks... But to wrap up, Bank of America (BAC) and Citigroup (C) earnings also beat estimates. In fact, across the group, every bank cleared expectations.
And JPMorgan reset the bar.
There May Be Trouble Ahead
After this blockbuster quarter, JPMorgan CEO Jamie Dimon highlighted the economy's "notable resiliency." But he urged caution moving forward...
Dimon flagged geopolitical instability, persistent inflation, and even stretched asset valuations as potential risks, warning that they were "shifting below the surface like tectonic plates."
Whether these risks play out into downside for the financial sector remains to be seen.
But right now, the Power Gauge sees strength in both the financial sector and the bank industry specifically...
JPMorgan is one of the 238 banking companies that get a "bullish" rating in our system. And while the stock dipped more than 2% in premarket trading on Tuesday despite the record results, it has since popped back up 5%.
Under the hood in our system, we can see strong Technicals and Experts activity for JPMorgan. All of this shows that the business is not slowing down, despite potential headwinds.
In fact, our system flipped to "bullish" on JPM earlier this month. Of the four other banks that reported excellent earnings on Tuesday, only one has a "bullish" or better rating.
Put simply, five banks reported earnings on Tuesday morning. Four had good quarters...
One had the best quarter any American bank has ever reported.
Tuesday gave investors five banking data points to compare – and the Power Gauge has a clear view on which one stands out.
Good investing,
John Evelius
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-0.21%
9
16
6
S&P 500
-0.54%
119
316
63
NASDAQ
-1.64%
21
67
17
Small Caps
-0.06%
694
1047
309
Bonds
-0.04%
Real Estate
+2.92%
38
57
2
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+4.01%
Staples
+3.14%
Real Estate
+2.78%
Financial
+2.18%
Communication
+1.94%
Materials
+1.25%
Utilities
+0.75%
Discretionary
+0.42%
Health Care
-0.23%
Industrials
-0.53%
Information Technology
-4.22%
* * * *
Industry Focus
Bank
65
35
3
Over the past 6 months, the Bank subsector (KBE) has outperformed the S&P 500 by 4.15%. Its Power Bar ratio which measures future potential is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #4 of 21 subsectors and has moved up 1 slots over the past week.
Top Stocks
ASB
Associated Banc-Corp
AUB
Atlantic Union Bankshares Corporation
BANR
Banner Corporation
* * * *
Top Movers
Gainers
ABT
+10.71%
JBHT
+8.01%
FDXF
+7.50%
ERIE
+7.49%
CTAS
+7.22%
Losers
SNDK
-12.63%
STX
-10.00%
GLW
-9.19%
WDC
-9.15%
MRVL
-8.71%
* * * *
Earnings report
Earnings Surprises
PLD Prologis, Inc.
Q2
$1.11
Beat by $0.36
UNH UnitedHealth Group Incorporated
Q2
$6.38
Beat by $1.46
ISRG Intuitive Surgical, Inc.
Q2
$2.80
Beat by $0.30
STT State Street Corporation
Q2
$3.65
Beat by $0.31
GE General Electric Company
Q2
$2.02
Beat by $0.16
* * * *
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