Earnings preview: Bank of America, Goldman Sachs this week will be interesting
After last Friday’s release, which saw JPMorgan Chase, Wells Fargo, and Citigroup all beat forecasts but drop on concerns about escalating costs and falling dealmaking, there are more banks this week.
On Tuesday Bank of America releases its second quarter numbers and it’s the turn of Goldman Sachs on Wednesday. It will be an opportunity for traders to properly assess the environment for Wall Street banks.
(Video Transcript)
Banking stocks
After last Friday, which saw three big banking stocks come to the market with earnings, J.P. Morgan Chase, Wells Fargo, and Citigroup all bet on the top-line earnings and revenue estimates. We've got some other companies coming through this week.
But before I got into the numbers that were expected, I sort of quickly revisited what happened with a couple of these stocks. This is JPMorgan Chase on Friday, that stock was up considerably at the high points on Friday. We saw it rise all the way to $154.43, the highest we'd seen it since the 17th of February. Then came a really big pullback, and the stock was actually down on the extended trade, down 1/10 of 1% at the close because of concerns about the outlook.
Citigroup
The outlook was detailed quite nicely by Citigroup. Citigroup did actually pierce through this 49-point resistance at one point, but then came the drop down over 4% as at the close, concerns about rising costs, concerns about just not trading anymore, and volatility dropping, which is really hitting all these trading houses, and also M&A is down heavily.
Goldman Sachs
Now, tomorrow we get the Bank of America earnings expectations: $0.84 on revenues of $20.02 billion. And on Wednesday, Goldman Sachs was expected to post earnings of $3.46 per share on revenues of 10.66 billion. I want to show you the Goldman Sachs chart because this is going to be one of the ones that I think could well be worth watching. Goldman Sachs is an all-session stock on the IG platform, and we've seen it again recently, but it's one of the highs from a few months ago, according to Semaphore, citing people familiar with the company, and these earnings from Goldman will be its worst quarterly earnings in years.
Goldman's Green Sky
With write-downs on Goldman's Green Sky consumer lending business and on holdings of commercial real estate likely to exceed $2 billion, according to Semaphore, the return on equity of Goldman Sachs could be one of the ones to watch potentially on the downside. If that does continue to concern investors.
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