JPM

Uncertainty surrounding the interest rate road laid out by the U.S. central bankers initially prevented further development of the bullish rally towards new record highs in the banking segment. Either way, this is what these things look like from our point of view when looking at Wall Street's first response to quarterly reports of leading financial institutions before the weekend. JPMorgan Chase & Co, which is the largest banking business in the United States and also the world's biggest bank by market capitalization (nearly $600 billion at the moment) posted very strong earnings on July 12. It clearly beat consensus expectations in both top and bottom lines. However, its shares suddenly dipped after falling over 2% at the opening.

JPM got Q2 profit of $4.40 per share, which was $0.26 (+6.3%) higher than the average analyst estimate of $4.14 by Reuters poll, on its best ever revenue of $50.2 billion, topping Wall Street expectations for $4.28 per share in earnings on sales of $50.2 billion (+21.5% YoY compared to $41.3 in the same period of 2023), which was also way cooler than $42.5 billion and $39.9 billion during the previous two quarters. The better income was contributed with a $7.9 billion net gain related to Visa shares holding and non-interest revenue, driven by higher investment banking and asset management fees (increase by 50%), and CIB (corporate and investment banking) market share improving to 9.5% year-to-date.

The banking giant's CEO Jamie Dimon praised the current bank's performance, even though he marked moderate cautiousness about time to come. JPM was vigilant regarding potential economic risks, he emphasized while continuing to invest into growth and maintaining a robust balance sheet. The sceptics' camp mostly cited somewhat higher provision reserves for credit losses ($3.1 billion) and flattish trends in loans and deposits, including lower net income from bonds due to direct impact of higher for longer Federal Reserve's rates.

Meanwhile, Wells Fargo & Company (WFC) cut its forecast for net interest income the same day, which sent WFC shares 7.3% deeper despite impressing quarterly results as well. Yet, strong quarterly results did their job later, so that both JPM and WFC stocks were quickly picked up from Friday's lows, so that JPM nearly recover after losses before the end of the same trading session to climb another 2.5% on July 15, which allowed it to reset an all-time price record at $211.59 vs $210.29 in early July. Wells Fargo regained about half of its losses by July 16.

Banks do not fail Wall Street' crowds at the very beginning of the reporting season. They may be not performing as well on the charts as they could, walking rather in the rear-guard of the rallying Wall Street's formations, yet giving a positive tone for investors who are betting on upbeat reports from a diverse range of many other companies in their portfolios.