Big Bank Earnings Day is usually a celebration, and on the surface, this quarter looked great.
They all posted strong results. Most beat on both revenue and earnings, with solid fee growth, trading revenue, and wealth management strength.
We’re also in a supposedly bank-friendly environment with deregulation talk in Washington and stable credit costs.
But the market didn’t care.
Every major bank except Citigroup $C finished lower. A few of the stocks had their worst earnings reactions in years.
Even JPMorgan $JPM couldn’t hold onto its gains despite a double beat...
This was a classic case of good fundamentals, bad price action.
For all the hype around deregulation and strong results, the market’s message is clear: banks aren’t where the institutional money wants to be right now.
Here are the latest S&P 500 earnings stats 👇
*Click the image to enlarge it
Citigroup had a +2 reaction score after reporting a double beat.
They reported revenues of $21.67B, versus the expected $20.69B, and earnings per share of $1.96, versus the expected $1.61.
State Street had a -4.65 reaction score after reporting a double beat.
They reported revenues of $3.47B, versus the expected $3.35B, and earnings per share of $2.53, versus the expected $2.35.
Now let's dive into the data and talk about what happened with these reports 👇
C has been rewarded for 3 consecutive earnings reports 🔥
Citigroup rallied 3.6% after this earnings report, and here's why:
The bank delivered 8% revenue growth and a 25% jump in net income to $4.0B, with record results across key business lines like Services, Markets, and Wealth.
Net interest income, a key performance indicator for banks, rose 12% year-over-year to $15.2B.
Management also raised full-year revenue expectations to the high end of prior guidance and boosted the dividend to $0.60 per share while continuing buybacks.
This is the 3rd consecutive positive earnings reaction for Citigroup, pushing the stock to its highest level since 2008.
The stock is decisively resolving a massive multi-year base, marking the beginning of a brand-new primary uptrend.
As long as C stays above 83, the path of least resistance is higher for the foreseeable future.
STT had its worst earnings reaction in 8 quarters 🩸
State Street fell 7.3% after this earnings report, and here's why:
The company hit a record $49 trillion in AUC/A and $5.1 trillion in AUM.
Adjusted EPS climbed 18% year-over-year, fee revenues grew double digits, and FX trading volumes surged.
In addition to the solid quarter, management announced an 11% planned dividend increase, highlighting confidence in future cash flows.
Despite the strong report, the stock suffered a significant decline, marking its worst earnings reaction in eight quarters.
Price is running into the upper bounds of a massive base. Until the bulls can reclaim and hold above this resistance, the risk of further consolidation remains high.
If STT is above 114, the path of least resistance will shift from sideways to higher. Below it, the stock will likely be stuck in the same choppy range that has plagued it for years.
Thank you for reading.
- The Beat Report Team
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