In this series, we’ll explore the data announcements and events that may impact the performance of bank stocks during the upcoming week.
It’s the beginning of earnings season for the banks, and with two already under our belts, it’s important that bank investors keep an eye on the news for the next week. As we saw, record earnings weren’t enough to propel the reporting banks higher — so watch out for more declines in the days to come.
Earnings — Citigroup Inc (NYSE:C) announces its first-quarter earnings Monday morning. Following on the heels of two record-high earnings reports from JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC) , Citigroup Inc (NYSE:C) will be under a lot of scrutiny from shareholders. Though the record earnings didn’t save the other two banks from falling Friday, largely because of investors looking for more quality along with the quantity of profits.
Housing Market Index — as the housing market continues its slow but steady recovery, bank investors should look for signs of increased activity. One of the biggest takeaways from this week’s batch of earnings reports was a decrease in mortgage activity — a lead generator of revenue for the banks. This index provides a glimpse of the prospective buyer trend, giving bank investors a feel for how much new business could be coming to the banks.
Housing starts — another sign of the rebounding housing market, housing starts give investors the data on how many new homes will be entering the market shortly. This provides a continued look at the stream of new mortgage loans that may be originated by the banks.
Earnings — Bank of America Corp (NYSE:BAC) announces earnings for the first quarter. With plenty of pressure on the bank to show shareholders more progress, the news from JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo’s earnings calls are not giving investors much confidence in what Bank of America Corp (NYSE:BAC) will report. Continued pressure on net interest margins are expected, which creates increased stress on the banking sector’s ability to generate more revenue.
MBA purchase applications— Last week saw a big improvement in mortgage applications, with a 5% increase overall. Refinancings were the main driver of the gain, but this is important news for the banks, which generate most of their revenue through loans and application fees. Bank investors should watch this week’s numbers as a continued trend higher could signal returning business to the banks.
Bank reserve settlement — it’s that time again. Every two weeks, the Federal Reserve requires banks to check in with their capital reserve balances. While some banks have no problem meeting their required threshold, others may have to scramble to gather up enough cash to meet the requirements — leading to increases in inter-bank lending, which can influence movement in the Federal Funds Rate.
Jobless claims — the last few weeks have been all over the map in terms of the labor market data.