Bank stocks, including JPMorgan Chase (JPM) - Get JP Morgan Chase & Co. Report, Bank of America (BAC) - Get Bank of America Corporation Report, Citigroup (C) - Get Citigroup Inc. Report and Wells Fargo (WFC) - Get Wells Fargo & Company Report, rose Thursday ahead of what investors expect will be strong numbers.
Wall Street also is enthusiastic about the future, given President-elect Joe Biden’s determination to enact another fiscal stimulus package. There’s also optimism that the Covid vaccines will spark economic recovery.
The thinking also is that an economic rebound will boost interest rates. Higher long-term rates help banks because they borrow at short-term rates and lend and invest at long-term rates.
In addition, buoyant financial markets should help banks’ trading profits. Market strength also boosts their asset management and private banking businesses.
All the merger, acquisition and initial public offering activity of recent months also will aid banks. They advise on mergers and underwrite IPOs.
Many investors and analysts like JPMorgan the best, which reports earnings Friday along with Citigroup and Wells Fargo.
“JPMorgan Chase is arguably the most dominant bank in the U.S.,” Morningstar analyst Eric Compton wrote earlier this year. “The bank's combination of scale, diversification, and sound risk management seems like a simple path to competitive advantage, but few other firms have been able to execute a similar strategy.”
He noted JPMorgan's leading investment bank, commercial bank, credit card, retail bank, and asset and wealth management franchises
JPMorgan recently traded at $141.80, up 1.03%; Bank of America at $33.92, up 1.39%; Citigroup at $68.21, up 2.02%; and Wells Fargo at $34.90, up 3.25%.