Stock markets have started the year with caution following the recent pivot at the Federal Reserve, and now investors have recent earnings performance to focus on. Major banks and financial institutions kicked off the period this morning with JP Morgan, Wells Fargo, and Blackrock all reporting earnings to markets. Banks are highly rate-sensitive and the recent rise in US rates has brought a bit of encouragement to expectations around financial institutions in the US. As rates rise, banks can support greater margins in the business of loaning out money, and with expectations for 3-4 rate hikes this year that backdrop around the sector seems to be becoming brighter and brighter.

JP MORGAN CHASE (JPM)

topped both earnings at $3.33/share which was 32 cents above expectations. Credited to their investment banking division, revenue went above to $30.35 billion. However, their share price took a hit after future expectations were announced by CFO Jeremy Barnum, expecting that expenses are estimated to increase by 8% for 2022 driven by inflationary pressure.

JP Morgan (JPM) Daily Price Chart

Created by Kaithleen Pesantez

BLACKROCK (BLK)

has now surpassed consensus estimates for the past four quarters, with earnings most recently printing above expectations by 14.78% at $10.95 vs $9.54 expected to go along with AUM crossing above $10 trillion. BLK was down by 1.5% premarket and has continued a downward shift, mainly from a miss on revenue at $5.11 billion, down 0.86% from expected.

BlackRock (BLK) Daily Price Chart

Created by Kaithleen Pesantez

WELLS FARGO (WFC)

exceeded analysts’ expectations with earnings above expected by 10.62%. Earnings came in at $1.25 vs $1.13 demonstrating a huge jump in overall profits. Net income was at $5.75 billion, an 86% increase from just a year ago. Wells Fargo is anticipated to benefit from interest rates rising since majority of the bank is with the retail network and has a large deposit base. This will allow the bank to charge more for loans, thereby increasing profit margins and improving forward-looking expectations.

Wells Fargo (WFC) Daily Price Chart

Created by Kaithleen Pesantez