JPMorgan Chase, PNC Financial Beat; Wells Fargo Mixed – Investor's Business Daily

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JPMorgan Chase (JPM) reported better-than-expected fourth-quarter earnings early Friday, with Wells Fargo (WFC) and PNC Financial Services (PNC) set to report before the open.

JPMorgan Chase

X Estimates: Earnings per share of $1.69, down 1%, on revenue of $24.99 billion, up 7%.

Results: JPMorgan earned $1.76 adjusted on revenue of $25.45 billion. That earnings figure excludes a $2.4 billion negative impact from the Trump tax cuts.  JPMorgan sees a 19% effective tax rate in 2018.

Fixed income, credit and currency trading revenue tumbled 34% to $2.22 billion.

Stock: Shares of the Dow component dipped 0.4% to 110.25 in early trade on the stock market today. Shares were within range of a 108.50 buy point of a 3-weeks trading pattern. Breakouts from a 3-weeks-tight pattern is an opportunity for existing investors to add a few more shares to their holdings.

Bank of America (BAC) and Citigroup (C)

Wells Fargo

Estimates: EPS of $1.04, up 1%. Revenue is seen rising 4% to $22.427 billion.


Stock: Shares XXXX%.

PNC Financial Services

Estimates: A 12% jump in EPS to $2.20 on an 8% revenue increase to $4.168 billion.


Stock: Shares XXX%.

IBD’S TAKE: As an investor, you may wonder why buy points are important. The chart action of these top stocks offers an answer.

Analysts hadn’t exactly been expecting blowout earnings from the banks this month, as many financial institutions absorb short-term, but heavy, hits to their profits due to the tax reform.

Goldman Sachs (GS), has forecast a $5 billion dent to earnings, much of it due to the repatriation tax. Morgan Stanley (MS), Bank of America and Citigroup have said they would take big charges from writing down so-called deferred tax assets, which companies can use to ease their tax burden in the event of a loss.

Bank of America, Citigroup, Goldman Sachs and Morgan Stanley will report earnings next week.

Still, tax reform is largely expected to benefit the banks longer term. Analysts have said the legislation would likely be a bigger theme this earnings season than the results themselves, as Wall Street tries to assess the full benefits of the bill.

Financials also have been rallying in 2018 on higher bond yields, with the 10-year Treasury rate moving past 2.5% this week. Higher yields, including a wider spread between short- and long-term maturities, should bolster banks’ profitability in traditional lending.


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