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We may have all come on different ships, but we’re in the same boat now.” – Martin Luther King Jr.
Even after an ambitious $1.9 trillion stimulus plan unveiled by President-Elect Biden last night and promises for more in the future, US futures are lower this morning while US treasury yields are lower. There’s a ton of economic data coming up this morning beginning with producer prices, Empire Manufacturing, and retail sales at 8:30. Later, we’ll get reports on industrial production, and University of Michigan consumer sentiment.
It’s a three-day weekend as US financial markets will be closed on Monday in observance of the birthday of Martin Luther King Jr (his actual birthday would have been today). Enjoy the three-day weekend, because earnings season will kick into a higher gear starting next week.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, a discussion of Biden’s stimulus plan, an update on the latest national and international COVID trends (which were all positive), and much more.
Between this morning and Tuesday morning, seven of the largest US banks and brokerage firms will be reporting results. As of this writing, the four reports to cross the wires have been Citigroup (C), JPMorgan (JPM), PNC, and Wells Fargo (WFC). Of these four, all of them beat EPS forecasts while both C and WFC missed revenue estimates. In reaction, all four stocks are currently trading lower with declines of up to 3%. On Tuesday (Monday is a holiday), we’ll get reports from Bank of America (BAC), Charles Schwab (SCHW), and Goldman Sachs (GS).
Below we have provided a snapshot from our Trend Analyzer of each of the large banks reporting today and Tuesday morning showing where they are trading relative to their trading ranges. While we’re just barely halfway into the first month of the year, all seven of these stocks have posted gains that many would have been happy with for an entire year. With the exception of PNC, every other stock in the snapshot is already up over 10% YTD with GS and WFC both up over 15%!
With these strong gains in such a short period of time, though, all of these stocks are trading at short-term overbought levels, while BAC, GS, and JPM are all more than two standard deviations above their 50-day moving average heading into today’s trading. This could be one reason all four of the banks reporting this morning are trading lower even though they all topped EPS forecasts. With high stock prices also comes high expectations, so that’s something to watch in these companies as they report.