NYSE:JPM is under Algo Engine buy conditions and is a current holding in our Dow 30 model portfolio.
JPM reported March quarter earnings with revenue up 5% to $29.9b and profit also up 5% to $9.18bn.
Growth was most evident in the group’s retail lending business, where profit surged 19 percent to $3.96bn.
Investment banking and asset management divisions were weaker.
Overall, J.P. Morgan’s results show the firm is still benefiting from the Fed’s four rate hikes last year. It remains our preferred US bank stock with strong buying support near the $105 level.
Shares of JP Morgan reached an all-time high of $112.80 as the firm announced adjusted Q4 EPS of $1.76 versus expectations of $1.69.
Revenue numbers were announced at $25.45 billion against the street’s forecast of $25.15 billion.
The small gain in revenue was tempered by a 34% decline in its fixed-interest revenue, which was a result of lower market volatility and tighter credit spreads.
The company returned $6.7 billion back to shareholders during Q4 with $4.7 in net share buy-backs.
With the major indexes at elevated levels, Q4 earnings could add some volatility to global equity markets.
Other key banking names reporting this week include CitiBank on Tuesday followed by Goldman Sachs and BoA on Wednesday.
JP Morgan Chase
Despite beating top line quarterly expectations, shares in US banking giants JP Morgan and Citigroup both fell on Wall Street as trading revenue numbers showed a sharp decline on a year-on-year basis.
Citigroup shares closed 3.4% lower after their trading revenue dropped 16% and JP Morgan shares slipped 1% lower on a 27% fall in year-over-year revenue.
We expect the other major US banks to report the same fall in trading revenue as lower volumes on the NYSE, combined with historically low price volatility, reduces overall market participation.
The next key levels of support are $67.50 for Citigroup and $91.70 for JP Morgan.
Before the US market opens later today, JP Morgan, Citigroup and Wells Fargo will report their Q2 results.
After last year’s post-election rally, these stocks and others in the financial sector have been trading in wide ranges.
However, over the last few weeks, bank stocks have rallied after the results of the FED’s “stress tests”, a push higher in short-term rates and hopes of further government de-regulation.
For Q2, JP Morgan is expected to report earnings of $1.57 per share, up 2 cents from last year on revenue of $24.8 billion. Wells Fargo is expected to report earnings of $1.02 per share, which is up 1 cent from last year on revenue of $22.3 billion. Citigroup is expected to report earnings of $1.21 per share, which is 3 cents below last year on lower revenue of $17.3 billion.
Our base case for the US banks is that trading revenues will be trending lower for the remainder of the year and the current levels look fully-valued with risk to the downside.
On Friday night JP Morgan, Citi and Wells Fargo all reported.
Wells Fargo’s profit dropped for a fourth straight quarter. JP Morgan and Citi beat low expectations, as strength in bond trading volumes picked up in the third quarter.
Citi Group outperformed expectations for third-quarter net profit after trading revenue surged 35 percent. Net income exceeded market expectations, (although fell 11%), coming in at $1.24 per share.
Citi Group (C.NYS)
Well Fargo (WFC.NYS)
JP Morgan (JPM.NYS)
Investors will focus this week on the upcoming earnings results for Goldman Sachs and Morgan Stanley.
In this month’s market strategy recording, we looked at the key levels in the S&P500 and the Dow Jones, with a focus on old resistance becoming new support. S&p500 earnings need to deliver on average, $30 – $32 per share to meet market expectations.
If you missed the recording this month, please sign up at www.investorsignals.com
JPMorgan – solid second quarter earnings signal improved health for US financials. This is bullish for upcoming bank earnings results in general. Analysts had generally lowered expectations for bank earnings this quarter due to low global growth. Our outlook on JPM and the major index is for mostly sideways consolidation with solid support at the lower range of the band.
JPMorgan Q2 earnings beat on both top and bottom line at $1.55 a share and on revenue of $25.2 billion.