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Earnings season is kicking into high gear this week, and the big banks are leading the charge. Six of the largest U.S. banks are set to report quarterly financial results on Tuesday and Wednesday, and investors are watching closely to see if the recent winning streak continues — or if the one laggard can finally catch up.
Here's a rundown of who's reporting, how they've been performing, and what to keep an eye on.
All six banks report before the market opens. On Tuesday, we'll hear from Citigroup (C), Goldman Sachs (GS), JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC). Then on Wednesday, Morgan Stanley (MS) rounds things out.
Five of these six have something in common: a solid track record of beating analyst estimates for both earnings per share and revenue. The one that doesn't? Wells Fargo. And that's showing up in the stock price.
“While it’s been a mixed year for the financial sector overall, many of the large banks have been thriving,” said Jay Woods, Chief Market Strategist at Freedom Capital Markets. “Morgan Stanley, Goldman Sachs and Citi have all gained over 20% as trading revenue and an improving IPO landscape have helped fuel their returns. JPMorgan and Bank of America have started to rally.”
Wells Fargo, meanwhile, is down 6.5% year-to-date — the only negative return in the group.
Let's look at the numbers. Over the past 10 quarters, here's how each bank has performed relative to analyst expectations:
That consistency — or lack thereof — maps pretty neatly onto stock performance so far this year. As of Friday's close, here are the year-to-date returns:
The two banks that have beaten both EPS and revenue in every single one of the last 10 quarters — JPMorgan and Morgan Stanley — are at opposite ends of the performance spectrum. Morgan Stanley is the top performer, while JPMorgan is near the bottom. But the real standout is Wells Fargo, which has the most misses and the worst return.
Beyond the numbers, the commentary from bank executives could move markets. Woods highlights a few big questions: “Will higher for longer interest rates continue to support lending profits? Will a surge in IPOs and M&A activity supercharge Wall Street trading desks?”
But perhaps the most important thing to listen for is what the banks say about the health of the consumer and the broader economy. “If the banks paint an optimistic picture while credit quality remains strong, it could reinforce the narrative that the economy is proving far more resilient than many expected,” Woods said. “This could provide a needed tailwind for equities as earnings season gets underway.”
These six stocks collectively make up 30.4% of the Financial Select Sector SPDR Fund (XLF). Goldman Sachs and JPMorgan are also components of the Dow Jones Industrial Average, with Goldman Sachs being the top holding in the SPDR Dow Jones Industrial Average ETF (DIA) at 11.9% of assets, and JPMorgan ranking 11th at 3.8%. Together, they account for 15.7% of that ETF.
So whether you're watching the financial sector, the Dow, or just looking for clues about the economy, this week's bank earnings are a big deal. And if you're betting on a turnaround, Wells Fargo might be the most interesting name to watch.
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