Big bank stocks slide as executives temper earnings and digest less onerous capital increases

Published On Sep 10, 2024, 5:12 PM

Big bank stocks, including JPMorgan Chase, Bank of America, Citigroup, and Goldman Sachs, saw declines amidst cautionary earnings outlooks despite a less onerous capital requirement proposal by U.S. regulators. Executives expressed concerns about future earnings and the impact of trading revenues. Investment banking fees are expected to remain flat, and credit costs are projected to rise for some banks. Analyst sentiment suggests potential over-optimism regarding earnings growth in 2025.

Stock Forecasts

The tempered outlook from major banks may indicate industry-wide weaknesses that could affect stock performance. Given the concerns highlighted about future earnings, and the recent selling pressure on bank stocks, investors might want to be cautious or consider short positions in these stocks to mitigate potential losses.

Bank of America’s comments indicating a slight recovery in net interest income could present opportunities for investors; however, the selling pressure due to investor sentiments about earnings keeps a negative outlook.

Citigroup's projected rise in credit costs and the decline in trading revenue suggest a stable but cautious approach to investing in its stock, leaning towards a negative sentiment in the short term.

Goldman Sachs faces challenges with falling trading revenue and significant hits to earnings from credit partnerships, which could indicate a bearish outlook for its stock moving forward.

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