The reporting cycle for Corporate America begins on Friday with JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., and Wells Fargo & Co. This follows a 23% increase in a US bank stock index during the previous quarter, which caused concern among the overall market.
Bank stock prices were under pressure for the majority of 2023, but began to rise sharply in late October, fueled by optimism that the Federal Reserve would cease its rate-hike campaign without instigating a recession. Currently, investors are preoccupied with the timing of policy easing, and they will analyze its ramifications for every aspect of the lenders’ operations, including the stability of their loan portfolios and the prospects for deposit rates.
“Banks are obviously not as inexpensive as they once were, but I do not believe the public believes that bank valuations are excessive,” said Goldman Sachs Group Inc. analyst Richard Ramsden.
Ramsden stated that in the event that banks exhibit greater optimism than anticipated regarding net interest income, loan growth, capital markets, and deposit pricing, “everything that will undoubtedly translate into higher earnings and likely further relative outperformance from certain banks.”
Thursday, the KBW Bank Index declined by approximately 1%, underperforming the market as a whole, which finished the day essentially unchanged.
Further reading: Leading U.S. banks eager for rate pressure relief following Fed hikes
The focus shifts to the earnings reports released by Morgan Stanley and Goldman Sachs on Tuesday. The initial outcomes from regional lenders are also disclosed on the same day, with PNC Financial Services Group releasing its report, which serves as an indicator for the entire region.
