According to the VITON financial APP, on Thursday, the US stock market experienced severe volatility, with large stocks and the Nasdaq index falling, while small stocks and other market sectors saw strong gains. Against this backdrop, market attention is now turning to the upcoming earnings reports of several heavyweight banks, hoping to gain insights into the future direction of the market from these key indicators.
It is understood that JPMorgan Chase (JPM.US), Wells Fargo (WFC.US), and Citigroup (C.US) are scheduled to release their quarterly financial reports before the market opens on Friday. In these upcoming earnings reports, JPMorgan Chase's stock price is approaching its historical high, indicating a strong buy signal; Citigroup has shown a breakthrough performance this week, with its stock price trend attracting attention; while Wells Fargo's stock price shows signs of bottoming out, indicating that its market performance may be on the verge of a turnaround. The market generally expects that after the easing of the situation of the inverted yield curve in government bonds, the net interest margin in the second half of the year will improve.
<h2>Banks Increase Dividends After Stress Tests</h2>
On June 28, the Federal Reserve announced that all 23 major banks performed well in the stress tests, meeting standards higher than the minimum capital requirements even under assumed economic recession scenarios. Despite predicting total losses of up to $541 billion, the test results demonstrate the resilience of the banking system.
Following the annual stress tests, several banks announced plans to increase dividends and stock buybacks. JPMorgan Chase raised its dividend from $1.15 to $1.25 and approved a stock buyback plan of up to $30 billion. Wells Fargo increased its dividend by 14% to 40 cents and hinted at increasing stock buybacks next year. Citigroup raised its dividend by 3 cents to 56 cents per share and stated that it will evaluate the buyback plan quarterly.
Jefferies analyst Ken Usdin raised the target stock prices for JPMorgan Chase and Wells Fargo on July 3, showing optimism about the prospects of these two banks. Currently, Jefferies predicts that the Federal Reserve will implement five interest rate cuts by 2025, each cut being 25 basis points, and expects this series of rate cuts to prompt repricing of fixed-rate assets and help banks improve net interest margins through swaps and hedging operations. In addition, Jefferies pointed out that the slowdown in bank loan growth and the rise in deposit costs are mainly due to the impact of a prolonged high-interest rate environment.
Based on these analyses, Jefferies raised JPMorgan Chase's target stock price from $230 to $239 and maintained a buy rating on the stock. For Wells Fargo, its target stock price was also raised from $62 to $64, while maintaining a hold rating. These adjustments reflect positive market expectations for the future performance of these financial institutions.
<h2>JPMorgan Chase</h2>
FactSet analysts hold a cautiously optimistic view on the upcoming earnings report of JPMorgan Chase, expecting the bank's adjusted earnings per share to decline by 11.6% to $4.20, but revenue is expected to grow by 2.2% to $42.23 billion
It is worth noting that analysts have raised their profit expectations for JPMorgan Chase following the recent release of the Federal Reserve's stress test results.
In terms of net interest income, it is expected to grow by 6.5% year-on-year, reaching $23.2 billion. Although analysts predict that JPMorgan Chase's net interest margin for this quarter will slightly decrease to 2.65%, this number is still higher than the 2.62% from the same period last year, and only slightly lower than the 2.71% from the previous quarter.
Furthermore, FactSet expects JPMorgan Chase to increase its credit loss provisions from $18.8 billion in the previous quarter to $27.9 billion, although this number is slightly lower than the $28.9 billion from the same period last year.
Looking back at the previous quarter, despite JPMorgan Chase's performance exceeding market expectations, due to the bank's conservative outlook on net interest income and an upward adjustment in expenditure expectations, its stock price experienced some fluctuations.
In terms of stock performance, after experiencing a slight decline on Thursday, JPMorgan Chase still maintains a key support level above the 10-day moving average. In addition, the stock regained the buying point of $205.88 earlier this week and has entered a stable buying zone for six weeks. On July 3rd, JPMorgan Chase's stock price hit a historical high of $210.38, and since the beginning of this year, its stock price has accumulated a 22% increase.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20240712/1720757306751392.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20240712/1720757306751392.png"/>
Figure 1
<h2>Wells Fargo</h2>
FactSet analysts have given cautious forecasts for the upcoming financial report of Wells Fargo, expecting a moderate increase of 3.2% in earnings per share to $1.29. However, total revenue is expected to slightly decline by 1.2% to $202.9 billion.
In terms of net interest income, analysts expect a 7.9% decrease to $121.2 billion. Additionally, Wells Fargo's net interest margin is expected to drop from 2.81% in the first quarter to 2.77%, showing some pressure compared to last year's 3.03%.
Regarding credit loss reserves, analysts predict that Wells Fargo will set aside $12.7 billion, an increase from the previous quarter's $9.38 billion but lower than the $17.1 billion from the same period last year. This indicates that Wells Fargo is adjusting its risk expectations and reserve levels.
At the same time, Wells Fargo is renegotiating the Bilt Technologies contract for the Bilt Lease Rewards credit card. This contract allows Bilt users to earn points by paying rent with a credit card, while landlords waive the usual credit card payment fees. However, reports suggest that this plan could result in up to $10 million in monthly losses for Wells Fargo
In terms of stock market performance, Wells Fargo's stock rose slightly on Thursday and successfully broke through the 50-day moving average, indicating a certain optimistic outlook from the market on its prospects. The stock price is currently targeting the cup-and-handle pattern buy point at $61.18, which is typically seen as a signal of an upward trend in technical analysis.
As of 2024, Wells Fargo's stock price has already achieved a 22.2% increase, reflecting investors' confidence in its long-term value and market performance. Despite facing some challenges and adjustments, Wells Fargo's fundamentals and market expectations remain robust.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20240712/1720757319965628.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20240712/1720757319965628.png"/>
Figure 2
<h2>Citigroup</h2>
Analysts at FactSet predict that Citigroup's upcoming quarterly earnings are expected to achieve a 4.5% growth, reaching $1.39 per share, while revenue is forecasted to increase by 3.3% to $20.07 billion.
Although net interest income for this quarter is expected to remain flat compared to the previous quarter at $13.5 billion, it shows a slight decrease from last year's $13.9 billion. Additionally, analysts expect the net interest margin to decrease slightly from 2.48% in the previous fiscal year to 2.41%.
In terms of credit loss reserves, Citigroup is expected to reach $2.6 billion this quarter, which is not only higher than the $2.37 billion in the previous quarter but also significantly higher than the $1.82 billion in the same period last year, reflecting the bank's cautious approach to risk management.
Citibank also announced a significant decision: after operating in the Haitian market for over 50 years, the bank will cease its operations. Citibank plans to voluntarily relinquish its local banking license after obtaining regulatory approval. Nevertheless, Citibank remains committed to providing international banking services and related services to existing clients.
In terms of stock market performance, Citigroup's stock price fell by 1.9% on Thursday, but overall, the stock price remains within a six-week flat buying range. It is worth noting that Citigroup's stock price rebounded above the buy point of $64.98 on Tuesday, indicating positive market interest in its stock.
From the beginning of the year to date, Citigroup's stock price has already achieved a 27.7% increase, demonstrating not only investors' confidence in Citigroup's performance but also reflecting the market's expectations for its future growth potential.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20240712/1720757350397628.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="image.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20240712/1720757350397628.png"/>
Figure 3
Following the three banks mentioned above, financial giants Goldman Sachs (GS.US), Bank of America (BAC.US), and Morgan Stanley (MS.US) will also unveil their financial reports early next week. At that time, the market will welcome further news on dividend increases and stock buyback plans for these banks. Of particular note, Morgan Stanley announced a stock buyback plan of up to $20 billion, demonstrating confidence in the company's value and market outlook

The U.S. stock market has experienced intense volatility, with the market focusing on the upcoming earnings reports of JPMorgan Chase, Wells Fargo, and Citigroup. JPMorgan Chase's stock price is approaching historical highs, indicating a buy signal; Citigroup's performance is groundbreaking, with its stock price trend attracting attention; Wells Fargo's stock price shows signs of bottoming out, potentially ushering in a turnaround. It is expected that net interest margins will improve. Several banks have announced plans to increase dividends and stock buybacks. Jefferies analysts have raised their target stock prices for JPMorgan Chase and Wells Fargo, showing optimism

Zhitong

Wells Fargo

Citigroup

JPMorgan Chase

After the volatility in the US stock market, the focus is on bank financial reports: JPMorgan Chase, Wells Fargo, and Citigroup financial reports will reveal the new market direction