Big banks, big opportunity? Earnings season kicks off

Each quarter, publicly listed companies share their earnings reports with their investors and the general public. These reports provide insights into each company’s performance and more often than not, impact their stock prices. Over the next six weeks, companies will be sharing their reports for the second quarter of 2019 (Q2), with major banks kicking off the earnings season.

Reporting earnings during a bull run

Despite some pessimism ahead of the previous earnings season, Q2 of 2019 ended up being incredibly positive for US markets. Just at the end of the first half of the year, top indices reached new all-time highs, as the SPX500, DJ30 and NSDQ100 all hit never-before-seen levels.

Ahead of this earnings season, the market was exposed to influential external forces, which could impact Wall Street tremendously. On the global front, the US and China’s ongoing trade war continues to pose a risk to markets, since an agreement has not yet been reached and, while Trump and Xi agreed not to impose new tariffs for the time being, there’s always the chance of a sudden escalation.

On the local front, US markets are awaiting the Fed’s next trade decision, coming at the end of the month. Many analysts expected the Fed to cut rates, thus boosting markets, however, the most recent NFP report showed strong job growth in the country, which could cause the Fed to wait.

Banking on earnings

The last time around, several big banks showed impressive performances, closing out the first quarter of 2019 with positive results. Citigroup, the 3rd largest bank in the US, will be the first to report earnings on Monday, July 15th, followed by JPMorgan Chase, Wells Fargo and Goldman Sachs on Tuesday.

After ending 2018 with positive results, JPMorgan Chase remained on the same trajectory over the first quarter of 2019, beating all estimates and posting a record-breaking quarter. While Citigroup also beat estimates, its overall performance was lacking, as it posted a drop in revenue in Q1 of 2019.

Wells Fargo also has some ground to make up. Its last earnings report beat expectations, but weak guidance issued with the report had a negative impact on its stock, causing it to fall 3.1% the day after reporting earnings. Closing out the “big 5” is the Bank of America, which will be reporting earnings on the 17th. Despite record-breaking profits, America’s 2nd largest bank saw its stock dip the last time around, as the BAC stock fell more than 2.5% on weak guidance.

Investing in the financial sector on eToro

TheBigBanks CopyPortfolio is one of eToro’s first Market CopyPortfolios, offering investors a thematic investment opportunity in a fully allocated portfolio comprised of leading banks and financial institutions. TheBigBanks was created and is managed by eToro’s Investment Committee. The Portfolio is rebalanced periodically by the committee in an attempt to optimise performance.

The upcoming earnings season will no doubt impact markets, and since the financial sector is the first major segment to report, investors will be watching it closely over the coming weeks. To stay posted on recent and upcoming earnings reports, follow the eToro Earnings Reports Calendar.

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