JPMorgan, Wells Fargo, Goldman Sachs and Morgan Stanley to kick off earnings season for big financials – Stock Market News
January 14, 2019 7:26 pm
The last quarter of 2018 was the worst experienced by global stocks in seven years, with the S&P 500 financials index closing lower by 9%. JPMorgan Chase & Co and Wells Fargo will be among the first of the largest contributors of the index to report earnings results for the messy quarter on Tuesday, while on Wednesday and Thursday further evidence on performance will follow from Goldman Sachs and Morgan Stanley respectively, all issued before Wall Street’s opening bell. Yet while a number of factors including the escalated US-Sino trade war, Brexit and the Fed’s rate hiking puzzle would keep analysts cautious, the average recommendation from I/B/E/S Thomson Reuters is buy for JPMorgan, Wells Fargo and Morgan Stanley which matches the buy suggestion for the Banks’ peer group. For Goldman Sachs, though, the average recommendation is hold.
JPMorgan Chase & Co
The biggest US bank by market capitalization is expected to report a gain of around 25% in its fourth-quarter earnings, with the average estimate of 24 analysts standing at $2.21 per share from $1.76 registered in the same period last year. Projections were ranging between $2.40 and $2.10, in the past four weeks, while it’s also worth noting that the actual numbers surprised markets to the upside for the past three years in a row.
The company saw its net income from interest rates rising substantially on the back of a more hawkish Fed in the third quarter and its shares rebounding back to record highs in Wall Street. But with investors turning more concerned about the already evident effects of the US trade protectionism on key economies and worries rising over the slowing housing sector, JPMorgan’s share price could not maintain momentum in the fourth quarter, dropping to two-year lows. The Trump Wall dispute, which has kept government services partially closed for the fourth week now, has also added some risk-off as the banks cannot proceed effectively with their paper operations.
This month the stock managed to climb back above its 50-period moving average (MA) and while the recent rally looks temporary as the price seems to be reversing lower again, a stronger-than-expected earnings report would help the stock to resume its uptrend. In other words, the price could overcome the latest peak of 101.82 where the 50% Fibonacci of the downleg from 112.40 to 91.11 currently stands, to reach a key barrier around 103. Slightly above, the 61.8% Fibonacci of 104.19 could also provide some resistance.
Alternatively, a miss in the data may push the stock below the 38.2% Fibonacci of 99.45. and towards the 23.6% Fibonacci of 96.26. Below that, the door could open for the 93.60 support.
Besides earnings per share (EPS), revenues are also predicted to come higher year-on year at $26.86 billion from $25.4 billion before. Still, traders would feel more confident to increase their exposure if other banks beat forecasts too.
Wells Fargo & Co
The fourth largest US Bank, which has been fighting to resolve its legal scandals mainly related to consumer accounts the past three years, agreed with the Federal Attorney of all 50 States and the district of Columbia to pay $575 million at the end of December, repairing a breach of trust not only with its customers but also with Wall Street. Its shares bounced off five-year lows and broke above the 50-period moving average in the four-hour chart. Tuesday’s quarterly earnings could be another good news for traders if the results appear better than analysts’ estimates.
Particularly, analysts expect Wells Fargo to earn $1.19 per share in Q4, implying a 22.57% rise from the same quarter last year when earnings came in at $0.97 per share. The highest forecast stands at $1.24 and the lowest at $1.11.
On the other hand, revenues are said to drop from $22.05 billion in Q3 2017 to $21.74 billion in Q4 2018.
In Wall Street, Wells Fargo could see its stock price challenging the 49 round level in the wake of stronger-than-expected results, where the 50% Fibonacci of the downleg from 55 to 43 is located. Higher investors would be eagerly waiting for a close above the 61.8% Fibonacci of 50.44 in which case the bearish market would turn neutral.
A weaker outcome though may lead the price below the 50-period moving average currently at 47.16, while steeper decreases may shift focus to the 45.40 handle.
Goldman Sachs Group Inc
Unlike its peers, Godman Sachs under its new CEO David Solomon is not anticipated to have improved in the three months to December. Instead analysts see EPS lower at $3.69 on average on Wednesday compared to $5.58 a year ago and revenues down by 2.6% at $7,62 billion. Any updates regarding the bank’s recent legal conflict with the Malaysian government, which caused large losses to the company, would be valuable as well.
An upward surprise in the numbers could send the company’s stock somewhere between 180 and 184, with the latter being the 38.2% Fibonacci of the downleg from 234 to 151.70. Beating that region, the focus would turn to the 190-199 area.
In case the data disappoint, the 23.6% Fibonacci of 170.87 could provide support as it did in previous sessions ahead of the 166.55 barrier. A failure to hold above the latter could trigger further sell-off towards 160.
Morgan Stanley
Morgan Stanley will be next in line to report on earnings on Thursday and expectations are for EPS to have grown to $0.90 in the fourth quarter from $0.84 a year ago. Revenues though are predicted to have fallen to $9.33 billion from $9.50 billion.
In Wall Street, the bank’s share price could reach important resistance around 43. A significant violation of this mark may bring more buying into the market, with the stock probably stretching up to reach the 200-period MA at 44.88
A miss in the numbers could pressure the market down to 41, which bears were unable to pierce over the past few days. If however this prove a weak obstacle, then the way could open towards the 50-period MA at 40.39. Lower, negative momentum could pick up speed below 39.
The last quarter of 2018 was the worst experienced by global stocks in seven years, with the S&P 500 financials index closing lower by 9%. JPMorgan Chase & Co and Wells Fargo will be among the first of the largest contributors of the index to report earnings results for the messy quarter on Tuesday, while on Wednesday and Thursday further evidence on performance will follow from Goldman Sachs and Morgan Stanley respectively, all issued before Wall Street’s opening bell. Yet while a number of factors including the escalated US-Sino trade war, Brexit and the Fed’s rate hiking puzzle would keep analysts cautious, the average recommendation from I/B/E/S Thomson Reuters is buy for JPMorgan, Wells Fargo and Morgan Stanley which matches the buy suggestion for the Banks’ peer group. For Goldman Sachs, though, the average recommendation is hold.
JPMorgan Chase & Co
The biggest US bank by market capitalization is expected to report a gain of around 25% in its fourth-quarter earnings, with the average estimate of 24 analysts standing at $2.21 per share from $1.76 registered in the same period last year. Projections were ranging between $2.40 and $2.10, in the past four weeks, while it’s also worth noting that the actual numbers surprised markets to the upside for the past three years in a row.
The company saw its net income from interest rates rising substantially on the back of a more hawkish Fed in the third quarter and its shares rebounding back to record highs in Wall Street. But with investors turning more concerned about the already evident effects of the US trade protectionism on key economies and worries rising over the slowing housing sector, JPMorgan’s share price could not maintain momentum in the fourth quarter, dropping to two-year lows. The Trump Wall dispute, which has kept government services partially closed for the fourth week now, has also added some risk-off as the banks cannot proceed effectively with their paper operations.
This month the stock managed to climb back above its 50-period moving average (MA) and while the recent rally looks temporary as the price seems to be reversing lower again, a stronger-than-expected earnings report would help the stock to resume its uptrend. In other words, the price could overcome the latest peak of 101.82 where the 50% Fibonacci of the downleg from 112.40 to 91.11 currently stands, to reach a key barrier around 103. Slightly above, the 61.8% Fibonacci of 104.19 could also provide some resistance.
Alternatively, a miss in the data may push the stock below the 38.2% Fibonacci of 99.45. and towards the 23.6% Fibonacci of 96.26. Below that, the door could open for the 93.60 support.
Besides earnings per share (EPS), revenues are also predicted to come higher year-on year at $26.86 billion from $25.4 billion before. Still, traders would feel more confident to increase their exposure if other banks beat forecasts too.
Wells Fargo & Co
The fourth largest US Bank, which has been fighting to resolve its legal scandals mainly related to consumer accounts the past three years, agreed with the Federal Attorney of all 50 States and the district of Columbia to pay $575 million at the end of December, repairing a breach of trust not only with its customers but also with Wall Street. Its shares bounced off five-year lows and broke above the 50-period moving average in the four-hour chart. Tuesday’s quarterly earnings could be another good news for traders if the results appear better than analysts’ estimates.
Particularly, analysts expect Wells Fargo to earn $1.19 per share in Q4, implying a 22.57% rise from the same quarter last year when earnings came in at $0.97 per share. The highest forecast stands at $1.24 and the lowest at $1.11.
On the other hand, revenues are said to drop from $22.05 billion in Q3 2017 to $21.74 billion in Q4 2018.
In Wall Street, Wells Fargo could see its stock price challenging the 49 round level in the wake of stronger-than-expected results, where the 50% Fibonacci of the downleg from 55 to 43 is located. Higher investors would be eagerly waiting for a close above the 61.8% Fibonacci of 50.44 in which case the bearish market would turn neutral.
A weaker outcome though may lead the price below the 50-period moving average currently at 47.16, while steeper decreases may shift focus to the 45.40 handle.
Goldman Sachs Group Inc
Unlike its peers, Godman Sachs under its new CEO David Solomon is not anticipated to have improved in the three months to December. Instead analysts see EPS lower at $3.69 on average on Wednesday compared to $5.58 a year ago and revenues down by 2.6% at $7,62 billion. Any updates regarding the bank’s recent legal conflict with the Malaysian government, which caused large losses to the company, would be valuable as well.
An upward surprise in the numbers could send the company’s stock somewhere between 180 and 184, with the latter being the 38.2% Fibonacci of the downleg from 234 to 151.70. Beating that region, the focus would turn to the 190-199 area.
In case the data disappoint, the 23.6% Fibonacci of 170.87 could provide support as it did in previous sessions ahead of the 166.55 barrier. A failure to hold above the latter could trigger further sell-off towards 160.
Morgan Stanley
Morgan Stanley will be next in line to report on earnings on Thursday and expectations are for EPS to have grown to $0.90 in the fourth quarter from $0.84 a year ago. Revenues though are predicted to have fallen to $9.33 billion from $9.50 billion.
In Wall Street, the bank’s share price could reach important resistance around 43. A significant violation of this mark may bring more buying into the market, with the stock probably stretching up to reach the 200-period MA at 44.88
A miss in the numbers could pressure the market down to 41, which bears were unable to pierce over the past few days. If however this prove a weak obstacle, then the way could open towards the 50-period MA at 40.39. Lower, negative momentum could pick up speed below 39.
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