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Banks Coming Back To Profit

bank-of-americaBanks will be in the S&P’s 500 spotlight this week as they release their quarterly earnings one by one. The question of the various analysts is whether the surviving financial institutions will repeat the performance of the first quarter, when they surprisingly posted profits.

According to Reuters, analysts are not forecasting a replay of the first quarter, when stronger-than-expected results from financial companies sparked a rally in the sector and by extension, the rest of the market, that reached its apex in early June before fizzling out.

Earnings for the financial sector, as well as the rest of the S&P, are expected to have declined in the most recent quarter. Many investors are questioning whether the further performance of the banks will warrant improvements in the value of the stocks.

Among the blue-chip financial names reporting this week are Bank of America (BAC.N), Citigroup (C.N), Goldman Sachs (GS.N) and JPMorgan Chase (JPM.N), along with tech mainstays Google Inc (GOOG.O),International Business Machines (IBM.N) and Intel (INTC.O), as well as General Electric Co. (GE.N).

Some analysts said that they “would be surprised if they would see many positive news” on the banks’ earnings. 

Second-quarter earnings for financial companies are projected to have fallen 55 percent from a year ago, compared with a decline of 63 percent in the first quarter, according to Thomson Reuters’ data. Another analyst mentioned that the stock of the Bank of America (BAC.N) are among the cheapest on the market, which made those prices jump.

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