Here comes earnings season
Several big banks will report second quarter results on Friday. The financial sector should post healthy numbers...despite the recent blowup for regional banks.
Yearning for earnings? Pepsi and Delta will both report second quarter numbers on Thursday. But the profit parade really kicks off in earnest on Friday when a slew of big banks report their results, led by Dow component JPMorgan Chase.
Investors always are eager to hear what JPMorgan Chase CEO Jamie Dimon has to say about the economy, markets, banking landscape and perhaps his take on politics and the regulatory/legislation landscape in Washington. Dimon is typically blunt. Mincing words is not his style.
Rival banks Citigroup, State Street and Wells Fargo will also release their latest earnings Friday. So does asset management giant BlackRock, the owner of iShares. BlackRock CEO Larry Fink is also likely to share some insights about what’s happening on Wall Street. (Dow component UnitedHealth also reports earnings Friday for those of you looking for commentary about other sectors of the market.)
The good news for investors? Banks probably had a pretty good quarter, despite the brief chaos created by the flurry of regional bank failures earlier this year. According to estimates compiled by FactSet Research, financial firms are expected to post a 7.6% jump in revenues from a year ago. That’s the highest growth rate for all eleven sectors.
In fact, JPMorgan Chase benefited from the regional banking meltdown. It scooped up the assets of First Republic Bank in May. And JPMorgan Chase announced Tuesday that it hired John China, a 27-year veteran of Silicon Valley Bank, to help lead its commercial banking efforts for tech startups and VC firms.
So investors should keep an eye out for what Dimon and other JPMorgan execs (as well as top officials at the other big banks) have to say about the regional bank woes from earlier this year. With more and more economists and market strategists expressing hope that the US can avoid a recession this year (and perhaps even in 2024), it will be very interesting to see if the titans of Wall Street continue to be optimistic about the health of the consumer, businesses and the economy writ large.
After all, there is now a growing sense that the Federal Reserve isn’t done raising interest rates just yet. So it’s possible that the top banks might be a little more nervous about what’s next for the economy. More rate hikes could once again slow the housing market and put a dent in retail spending. And if Dimon is nervous about the Fed and broader economy, he probably won’t keep those concerns to himself.