Stock Market News – JPMorgan and Citigroup among first to release Q2 results, may give an indication of what is to follow
July 12, 2018 4:26 pm
JPMorgan Chase and Citigroup, the largest and fourth-largest US banks by market capitalization respectively, will be releasing their Q2 2018 earnings reports before Wall Street’s opening bell on Friday. Analysts’ consensus recommendation for both is “buy”, in line with the average recommendation for the Banks peer group.
According to analysts submitting their forecasts to Thomson Reuters’ estimate system (the Institutional Brokers’ Estimate System – I/B/E/S), JPMorgan’s quarterly earnings per share (EPS) are anticipated to stand at $2.21, with a downward revision from $2.23 taking place over the last four weeks. If the company’s bottom line comes as projected, this would represent a rise by around 21.5% compared to the same quarter last year when the corporation made $1.82 per share. Additionally, Wall Street analysts’ EPS estimates range from $2.16 to $2.30. It is of note that the firm managed to surpass earnings projections in all four quarters that preceded.
Should an earnings beat be delivered, JPMorgan’s stock price may generate buying interest to challenge the region around the current level of the 200-day moving average at $107.65, with the 50-day MA at $108.72 also being part of the area around this level. Not far above and in case of more bullish movement, additional resistance could occur around the $110 round figure which constituted a zone of congestion in previous months. On the downside and in case of a data miss, immediate support might take place around the $106 handle which managed to hold numerous times in the past. Steeper losses would shift the focus to the seven-and-a-half-month low of $102.20 from earlier in July and then to the $100 mark which may be of psychological significance.
Turning to Citigroup, EPS for the quarter ending June 2018 are expected to come in at $1.56, this being the result of a downward revision from $1.58 from four weeks ago. Still, should earnings come in line with forecasts, such an outcome would reflect an increase of around 22% relative to 2017’s respective quarter when the firm earned $1.28 per share. Meanwhile, earnings estimates for the firm range from $1.49 to $1.62 per share. Similar to rival JPMorgan, Citigroup exceeded analysts’ EPS projections in all four previous quarters.
If Citi’s earnings positively surprise yet again, potential long positioning by investors could push its stock price to conclusively break above the area around the 23.6% Fibonacci retracement level of the January 29 to June 26 downleg at 68.23; notice that the region around this point also encapsulates the current level of the 50-day MA at $68.35. Further above, the attention would increasingly turn to the 38.2% Fibonacci mark at $70.61 (including the $70 round figure), given that the one-and-a-half-month high of $69.35 from July 10 is broken first. However, in the event of disappointing results, the company’s shares may face selling pressure. Initial support to declines could come around the $67 handle which was congested from late-May until recently. More bearish movement would bring into scope the one-year low of $64.38 hit in late June.
Empirically, greater discrepancies between projected and actual results lead to more considerable movements in a given corporation’s share price, while it should be kept in mind that beyond the earnings numbers, revenue figures and management guidance will also be areas that are expected to come under scrutiny by market participants.
Briefly touching on the outlook for banks, the US rate trajectory and regulatory considerations are some of the drivers that can be instrumental in shaping it. In terms of the rate path, the Federal Reserve looks firmly on track to continue normalizing rates, restoring them to pre-crisis levels. Elevated rates are bank-positive as they are supportive of higher margins for banks. It should be stressed, though, that the current backdrop of a flattening US yield curve – the narrowing difference between long- and short-dated bond yields – is complicating the situation, counterbalancing some of the benefits for banks from rising short-term yields, as net interest margins (the difference between what financial institutions charge for loans and what they pay depositors) remain subdued.
On the regulatory front, the prospect of scaling down on related burdens imposed in the aftermath of the 2008 global financial crisis could well depend on the outcome of November’s mid-term elections. Republicans losing power in that electoral fight is likely to be seen as weakening the odds for deregulation in the banking sector, something which is expected to weigh on banks and more broadly financials.
In the meantime, global trade developments are also of importance as they can affect the overall market sentiment. Especially for banks though, beyond headline driven knee-jerk reactions, disruptions in world commerce could also act as a drag on them from a fundamental perspective (i.e. act to the detriment of their businesses).
Both JPMorgan and Citi are S&P 500 constituent stocks, with the former also being one of the thirty stocks that comprise the Dow Jones Industrial Average. Year-to-date, the two banks are trading lower by 0.9% and 8.6% correspondingly, with the S&P being up by 4.4% and the Dow up by 0.7% throughout the same period.
Wells Fargo and PNC Financial Services Group will also be releasing quarterly results before Friday’s US market open. Together with JPMorgan and Citi, their results are likely to be seen as giving an indication of what is to follow by other financials. In other words, upbeat figures are likely to boost other stocks within the same sector, and vice versa. Bank of America’s, Goldman Sachs’ and Morgan Stanley’s Q2 reports will be hitting the markets on Monday, Tuesday and Wednesday respectively.
In the wider picture, Reuters estimates put the S&P 500’s earnings growth rate at the very robust 20.7% in Q2. A recently released note by the brokerage department of Credit Suisse expects the equivalent number for big US banks to stand at an even higher 22%, being helped by accelerating investment banking revenues and loan growth during June.
JPMorgan Chase and Citigroup, the largest and fourth-largest US banks by market capitalization respectively, will be releasing their Q2 2018 earnings reports before Wall Street’s opening bell on Friday. Analysts’ consensus recommendation for both is “buy”, in line with the average recommendation for the Banks peer group.
According to analysts submitting their forecasts to Thomson Reuters’ estimate system (the Institutional Brokers’ Estimate System – I/B/E/S), JPMorgan’s quarterly earnings per share (EPS) are anticipated to stand at $2.21, with a downward revision from $2.23 taking place over the last four weeks. If the company’s bottom line comes as projected, this would represent a rise by around 21.5% compared to the same quarter last year when the corporation made $1.82 per share. Additionally, Wall Street analysts’ EPS estimates range from $2.16 to $2.30. It is of note that the firm managed to surpass earnings projections in all four quarters that preceded.
Should an earnings beat be delivered, JPMorgan’s stock price may generate buying interest to challenge the region around the current level of the 200-day moving average at $107.65, with the 50-day MA at $108.72 also being part of the area around this level. Not far above and in case of more bullish movement, additional resistance could occur around the $110 round figure which constituted a zone of congestion in previous months. On the downside and in case of a data miss, immediate support might take place around the $106 handle which managed to hold numerous times in the past. Steeper losses would shift the focus to the seven-and-a-half-month low of $102.20 from earlier in July and then to the $100 mark which may be of psychological significance.
Turning to Citigroup, EPS for the quarter ending June 2018 are expected to come in at $1.56, this being the result of a downward revision from $1.58 from four weeks ago. Still, should earnings come in line with forecasts, such an outcome would reflect an increase of around 22% relative to 2017’s respective quarter when the firm earned $1.28 per share. Meanwhile, earnings estimates for the firm range from $1.49 to $1.62 per share. Similar to rival JPMorgan, Citigroup exceeded analysts’ EPS projections in all four previous quarters.
If Citi’s earnings positively surprise yet again, potential long positioning by investors could push its stock price to conclusively break above the area around the 23.6% Fibonacci retracement level of the January 29 to June 26 downleg at 68.23; notice that the region around this point also encapsulates the current level of the 50-day MA at $68.35. Further above, the attention would increasingly turn to the 38.2% Fibonacci mark at $70.61 (including the $70 round figure), given that the one-and-a-half-month high of $69.35 from July 10 is broken first. However, in the event of disappointing results, the company’s shares may face selling pressure. Initial support to declines could come around the $67 handle which was congested from late-May until recently. More bearish movement would bring into scope the one-year low of $64.38 hit in late June.
Empirically, greater discrepancies between projected and actual results lead to more considerable movements in a given corporation’s share price, while it should be kept in mind that beyond the earnings numbers, revenue figures and management guidance will also be areas that are expected to come under scrutiny by market participants.
Briefly touching on the outlook for banks, the US rate trajectory and regulatory considerations are some of the drivers that can be instrumental in shaping it. In terms of the rate path, the Federal Reserve looks firmly on track to continue normalizing rates, restoring them to pre-crisis levels. Elevated rates are bank-positive as they are supportive of higher margins for banks. It should be stressed, though, that the current backdrop of a flattening US yield curve – the narrowing difference between long- and short-dated bond yields – is complicating the situation, counterbalancing some of the benefits for banks from rising short-term yields, as net interest margins (the difference between what financial institutions charge for loans and what they pay depositors) remain subdued.
On the regulatory front, the prospect of scaling down on related burdens imposed in the aftermath of the 2008 global financial crisis could well depend on the outcome of November’s mid-term elections. Republicans losing power in that electoral fight is likely to be seen as weakening the odds for deregulation in the banking sector, something which is expected to weigh on banks and more broadly financials.
In the meantime, global trade developments are also of importance as they can affect the overall market sentiment. Especially for banks though, beyond headline driven knee-jerk reactions, disruptions in world commerce could also act as a drag on them from a fundamental perspective (i.e. act to the detriment of their businesses).
Both JPMorgan and Citi are S&P 500 constituent stocks, with the former also being one of the thirty stocks that comprise the Dow Jones Industrial Average. Year-to-date, the two banks are trading lower by 0.9% and 8.6% correspondingly, with the S&P being up by 4.4% and the Dow up by 0.7% throughout the same period.
Wells Fargo and PNC Financial Services Group will also be releasing quarterly results before Friday’s US market open. Together with JPMorgan and Citi, their results are likely to be seen as giving an indication of what is to follow by other financials. In other words, upbeat figures are likely to boost other stocks within the same sector, and vice versa. Bank of America’s, Goldman Sachs’ and Morgan Stanley’s Q2 reports will be hitting the markets on Monday, Tuesday and Wednesday respectively.
In the wider picture, Reuters estimates put the S&P 500’s earnings growth rate at the very robust 20.7% in Q2. A recently released note by the brokerage department of Credit Suisse expects the equivalent number for big US banks to stand at an even higher 22%, being helped by accelerating investment banking revenues and loan growth during June.
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