Big Bank Earnings to Test Stocks’ Market-Trouncing Resurgence

The biggest US bank stocks have soared over the past six months, outpacing the S&P 500’s gains. But whether they can maintain that momentum is the big question entering earnings season.

Investors will be scrutinizing first-quarter results from the likes of JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co. and Citigroup Inc. over the coming days just as prospects of imminent interest-rate cuts dim. Since hitting a trough in October, the group has soared past the broader market’s gains.

“You don’t typically see banks outperform the broader market these days,”said Piper Sandler analyst R. Scott Siefers. “Unquestionably, the bar is higher.”

wall street lenders outpace s&p 500

A year ago, banks were under pressure following the sudden collapse of Silicon Valley Bank in March, which set off tumult across the regional bank space and eventually dragged down two other lenders. Concerns about deposit flows rattled the industry, putting investors on tenterhooks and pushing stocks to levels that were “priced for catastrophe,” as an analyst put it then.

Now, investors will be closely watching banks’ outlook and commentary around key profit drivers like net interest income and investment banking.

Fewer interest rate cuts could bolster net interest income prospects for many large-cap banks and lead to upward guidance revisions, according to Morgan Stanley analyst Betsy Graseck.