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Stocks last week: Big banks are booming. Now here is the income


Bank stocks have a solid start to 2022, extending their gains from the second half of last year.

The Invesco Bank KBW ETF (KBWB), including Bank of America (BAC), Wells Fargo (WFC), JPMorgan Chase (JPM), Bancorp USA (USB) and Citigroup (OLD) is its top holding, which is up more than 8% this year and has gained more than 19% in the past six months. That’s better than the broader market.

JPMorgan Chase, Citi and Wells Fargo will let investors know how they did in Q4 and what to expect in 2022 when they report earnings on Friday.

The housing market won't slow down any time soon
Bancorp USA and Bank of America release their earnings on Wednesday, Jan. 19. So does the investment banking powerhouse. Morgan Stanley (AUNT). Goldman Sachs (GS) is due to report earnings on Tuesday, January 18.
Banks will benefit from the rate hikes, as long as they don’t rise too quickly and hurt 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 rate can go before they cool down red hot housing market.

Financial firms are also thriving, thanks to a stock market boom that has boosted trading activity. The rise in shares has also fueled more demand for mergers and initial public offerings, while also leading to an increase in lucrative investment banking fees.

Together, these trends could boost bank earnings. Analysts predict that JPMorgan Chase’s earnings per share will grow by nearly 70% in 2021.

Wall Street also forecasts a significant increase in profits for Citi, which is currently under the leadership of new CEO Jane Fraser and Wells Fargo, which is finally starting to recover from years of underperformance due to Fake account scandal.
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But investors want to hear what these banks have to say about the rapidly spreading Omicron variant of the coronavirus and how that could impact markets and the economy for the rest of the year.

Some of the top Wall Street firms, including JPMorgan Chase, Goldman Sachs and Black stones, has delayed plans to bring workers back to their exchanges, despite pressure from Eric Adams, the new mayor of New York City, bring everyone back to the Big Apple’s office.

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

There are concerns that the Federal Reserve could raise interest rates more aggressively than expected this year to reduce inflation. If that happens, it could send chills to both the housing market and the stock market.

All eyes are on the economy

Speaking of inflation, the US government will report December consumer price index figures on Wednesday.

CPI up 6.8% in the 12 months ending in November to the highest level in nearly four decades. Even after excluding volatile food and energy prices, core inflation rose 4.9% over the past year to its highest level since June 1991.
The market is concerned that inflationary pressures may not ease soon. The Fed now seems to share those worries. The central bank raised its forecast for overall and core price growth for 2022 at its meeting last month.
The minute of the Fed’s December meeting showed the central bank is concerned about “unexpectedly high inflation” due to “prolonged supply bottlenecks.”
However, American consumers have keep spending, although higher prices may start to tighten some budgets. The government will release retail sales figures for the key holiday month of December on Friday.
Retail sales spiked more than 16% in the 12 months ending November, but growth slows down from October to November.

Next

Monday: United States wholesale trade; Tilray (TLRY) income; The Tokyo Stock Exchange is closed for a market holiday
Tuesday: Brazilian consumer inflation; Albertsons income
Wednesday: US CPI; Jefferies (JEF) and KB Homepage (KBH) income
Thursday: US jobless claims and producer prices; Delta Airlines (DAL) and Taiwan Semiconductor (TSM) income

Friday: US retail sales, industrial production and consumer sentiment (U. of Michigan); Earnings for JPMorgan Chase, Citigroup, Wells Fargo and BlackRock

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