11 – 15 Oct | Wall Street Banks Report Earnings

The big earnings season officially kicks off again this week, although the economy’s momentum appears to have stalled. Indeed, US GDP growth could be halved this quarter compared to the last.

As usual, the major Wall Street banks are among the first to report. Their figures will set the scene for the rest of the earnings season. This is a good chance to monitor the banking sector, which could have an impact on your portfolio.

Latest news from the banking sector

The US banking industry hit the headlines recently after President Joe Biden appointed Saule Omarova to the head of the Office of the Comptroller of the Currency. This is a department within the Treasury which regulates and supervises the US national banks. So, why is her appointment noteworthy? She aims to make banks focus on “socially inclusive and sustainable economic growth,” with a plan to implement radical reform. The conservative branch of the banking industry isn’t exactly pleased.

From a broader view, the banking sector is still battling the economic shock caused by the Delta variant, as well as geopolitical conflicts between China and the US.

Which banks to watch?

Some US banking institutions are expected to post strong results. Be careful, however, because there are also some concerns.

Morgan Stanley will report its quarterly earnings on Thursday, October 14th. Recently, a Wall Street analyst called Mike Mayo rated the bank 4 out of 5 stars, based on its average rate of return of 13.6%, which is considered high. Earnings-per-share (EPS) could hover around $1.88.

The second bank on the calendar is Goldman Sachs. Analysts predict that earnings-per-share could come in 42% higher than last year, which bodes well for the financial health of the bank. Estimates for EPS were recently revised upwards from $8.71 to $9.71. Another good sign. Goldman Sachs reports on Wednesday, October 13th.

Analysts have some concerns…

Some estimates, however, are not so optimistic. JPMorgan Chase will publish its quarterly results on Wednesday, October 13th. The results should be fairly strong, however, the bank’s share price has only increased by 1.7% since April 2021.

The forecasts are also less optimistic for investment bank BlackRock, which presents its figures on Wednesday, October 13th. The company’s stock gained 47% over the past twelve months, with a potential growth outlook of 17.6% in the coming year. BlackRock has recently made significant investments in China, a move that seems risky to many analysts as Chinese companies are experiencing their worst quarter in history.

Finally, Bank of America, which also presents its figures this Thursday, October 14th, saw its estimates reduced. The forecasts for EPS dropped from $0.71 to $0.67. Additionally, the bank’s revenue could decline this quarter. It already fell 3.6% last quarter, year-over-year.

The ETF to watch

Note that most of the large US banks are listed on the S&P 500 Index, which is the main American benchmark, watched by investors around the world.

On BUX Zero, you can invest in an ETF that tracks this index: the S&P 500 Index ETF (Vanguard). It is one of the most-purchased stocks on the app, partly because it offers you fantastic diversification. You can invest regularly in this ETF, and more, by setting up a monthly Savings Plan on BUX Zero.

The overall impact on your portfolio

As we mentioned at the beginning of the article, the bank’s results are very important. These institutions are influential over the US markets and even European ones. It’s a good idea to monitor what goes on during the earnings season and understand how this period works. So, we’ve put together an article about this event that will help you navigate troubled water and make smarter decisions.

Economic and earnings calendar

Monday – The unemployment rate in China (August). Industrial production in Italy (August). The trade balance in the Netherlands (August). Quarterly figures from Gerresheimer.

Tuesday – ZEW Economic Sentiment Index in the Eurozone and Germany (October).

Wednesday – Inflation rate in Germany and the United States (September). Industrial production in the eurozone (August). Quarterly figures from Delta Air Lines, BlackRock, JPMorgan Chase, Goldman Sachs, Vilmorin, and CropEnergies.

Thursday – Inflation rate in Ireland (September). IEA report on the oil market in France. ECB meeting. Quarterly figures from Domino’s Pizza, Walgreens, Citigroup, Wells Fargo, Morgan Stanley, US Bancorp, Bank of America, and TomTom.

Friday – New car registrations (September). Inflation rate in France and Italy (September). Trade balance in the eurozone (August). ECB meeting. Quarterly figures from Prologis.

We’ll be back next week with another edition of the BUX Breakdown. In the meantime, have a good week on the markets!

The BUX Breakdown was written by Clémentine Pougnet.

All views, opinions, and analyses in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.