Key points:
- Major banks released better-than-expected Q4 earnings, yet Wells Fargo was the only stock that gained this morning
- A reduction in market revenue, Omicron and reduction in consumer spending all weighed on investor sentiment
- As interest rates are set to rise, investors should benefit from holding banking stocks in the coming year
On an important day for banking stocks; all eyes were glued towards the US’s major financial names, with JPMorgan Chase (NYSE: JPM), Citigroup (NYSE: C), and Wells Fargo (NYSE: WFC) all releasing quarterly earnings early this morning.
Results were ultimately positive but yet two out of three stocks recorded small losses in premarket trading. However, looking towards 2022 and the changing economic landscape that is set to unravel, rising interest rates might make banking stocks a popular pick in the coming weeks or months.
JPM, Citi and Wells Fargo all posted better-than-expected Q4 earnings off the back of the fed’s decision; yet reference to certain headwinds meant bulls wavered on the side of caution this morning, with Wells Fargo the only stock showing a gain of 1.2%.
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JMP suffered the biggest loss, currently down 4% in premarket trading. The bank recorded an increase in lending and revenue from the bank’s investment division, but investors seem to have focused on a noticeable slowdown in trading activity – whereby markets revenue fell by 11%.
Today’s earnings came at a difficult time. The economic landscape is still struggling with Omicron fears, with banking stocks also affected by a reduction in consumer spending. However, investors should be looking at the year ahead.
With the fed increasing bond yields and hinting at multiple interest rate increases in the year to come; banking investors should benefit from an increase in revenue. Although consumer loan activity is still below pre-pandemic numbers; if Omicron fears subside then we can expect a gradual return to normal levels, with promising growth as a byproduct.