Earlier on Thursday, we noted how shares of JP Morgan Chase (JPM) had traded lower on their earnings reaction days for five straight quarters.  Despite the string of weak short-term reactions to earnings, though, JPM has performed very well in the period encompassing this streak rallying more than 66% since the start of September 2020.  While JPM’s streak of five straight negative reactions to earnings reports was impressive enough, two other big banks that reported on Thursday were riding even longer streaks of negative reactions to earnings.  Heading into Thursday’s report, Bank of America (BAC) had traded lower in reaction to earnings for seven straight quarters while Citigroup (C) traded down for six straight quarters.  In both cases, Thursday’s positive price reactions to their respective reports ended those streaks.

Like JPM, while both stocks have experienced very negative short-term reactions to their earnings reports, during the entire run of declines on their earnings reaction days, they have both rallied sharply.  In the case of BAC, the stock has rallied 33% since the start of 2020 when its earnings losing streak began, while shares of C are up 95% since the start of April when its six-quarter streak began.  In the case of Citi, in fact, it has actually outperformed the S&P 500 which is up 75% in that same span.  As noted with JPM, the performance of these two stocks also suggests that a stock’s short-term reaction to earnings isn’t necessarily a good indicator of its longer-term outlook.  Click here to view Bespoke’s premium membership options.

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