Investing.com | Jul 04, 2024 05:00AM ET
As we enter the second quarter 2024 earnings season in the United States, market sentiment remains bullish, with major indexes consistently reaching new historical highs.
Investors are eager to see the current earnings results and forecasts for the coming quarters, which will be critical in sustaining this momentum. Leading the charge are the large banks, which continue their upward trajectory alongside the broader market.
The banking sector was put through a stress test recently. This test is designed to assess the resilience of individual institutions in crisis scenarios. The positive outcomes from these tests have further fueled demand, bolstering investor confidence.
Yesterday, the Nasdaq and S&P 500 indexes hit new all-time highs, underscoring the robust buying sentiment. July historically tends to be a strong month for the stock market, particularly for the S&P 500, and this year's performance is no exception. Macroeconomic factors, such as better-than-expected GDP readings for May, have alleviated recession fears, providing further support for the bulls.
The ongoing revolution in artificial intelligence is also driving the bull market, with technology stocks, led by Nvidia Corporation (NASDAQ:NVDA), experiencing significant gains. Nvidia surged 4.57% yesterday, resuming its upward trend after a brief correction. If the impressive growth rates seen among the Big Seven tech companies continue, the bullish sentiment is likely to persist.
Following the successful completion of the Federal Reserve's stress tests for banks with over $100 billion in assets, JPMorgan (NYSE:JPM) is set to raise this year's dividend. The board has approved an increase from $1.15 to $1.25 per share, along with a $30 billion share buyback plan, reflecting the bank's strong financial health and resilience.
Source: InvestingPro
Ahead of the earnings release on July 12, with consensus expectations of $4.24 per share in net income and $43.639 billion in revenues, JP Morgan's stock is trading near historical highs at $210 per share. Strong demand momentum supports the bullish trend, and only significantly weak results could potentially disrupt this upward trajectory, which is not the anticipated scenario.
Wells Fargo (NYSE:WFC) retains significant upside potential, driven by recent developments and favorable market conditions.
The bank has completed the Federal Reserve's stress test, similar to JP Morgan. However, the bank remains constrained by a six-year-old Fed-imposed limit of $1.95 billion in maximum assets, restricting its expansion.
Source: InvestingPro
Primarily focused on individual consumers rather than investment banking, Wells Fargo faces higher deposit rates due to rising interest rates, resulting in proportionately lower returns on its loan portfolio. Despite these challenges, the bank's share price continues to rise. Analysts remain optimistic, highlighted by 13 upward revisions and only one downward revision ahead of the upcoming quarterly results.
Given its revenue structure, the bank should be a beneficiary of the start of the US interest rate cut cycle, which could take place this September.
***
Tired of watching the big players rake in profits while you're left on the sidelines?
InvestingPro's revolutionary AI tool, ProPicks, puts the power of Wall Street's secret weapon - AI-powered stock selection - at YOUR fingertips!
Don't miss this limited-time offer.
Subscribe to InvestingPro today and take your investing game to the next level !
Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.