Live Markets: Ahead of bank earnings

Dime Commercial Bancshares

09/01/2024 18:16

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      DJI off ~0.5%, S&P slips, Nasdaq up ~0.2%
    

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      Energy weakest S&P 500 sector; tech leads gainers
    

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      Dollar up slightly; gold ~flat; crude jumps >2%; bitcoin
dips
    

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      U.S. 10-Year Treasury yield edges up to ~4.01%
    

  
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    AHEAD OF BANK EARNINGS
    With the U.S. fourth quarter earnings season due for lift
off with major U.S. banks the first ones due to report starting
on Friday, KBW released its preview note for the sector. 
    It expects a Q4 EPS decline of 24% for the sector
year-over-year and a 9% decline quarter-over-quarter due to "NII
(net interest income) headwinds and "some degree of credit
normalization." 
    The analyst group, which specializes in financial companies,
wrote that it believes "the market is beginning to price in
positive EPS revisions" or looking beyond 2024 estimates but
that it expects 50bps of cuts to rates for 2024 compared with
market consensus expectation for 150bps of cuts.
    KBW notes that its analysts are above street consensus
estimates for 2024 results regarding its top pick stocks. 
Goldman Sachs  GS.N , Prosperity Bancshares  PB.N , Valley
National  VLY.O , and Banco Popular. 
    But the group's estimates are below consensus for Q4 2023
and 2024 for M&T Bank  MTB.N  and New York Community Bank
 NYCB.N , their two recommended underweight calls for Q4.
    Ahead of results it is overweight Cadence Bank  CADE.N ,
Prosperity, Pathward Financial  CASH.O , Heartland Financial
 HTLF.O , Heritage Financial  HFWA.O  and Dime Community
Bancshares  DCOM.O , while it is underweight M&T and  NYCB.N .
    It's top pick from universal banks is Goldman Sachs. Despite
a challenging quarter for the universal banks, and particularly
for Morgan Stanley  MS.N  with declining wealth management
revenues q/q.
    KBW says it sees outlook as "more important than the
quarter." It said it expects "narrowing credit spreads to
provide conditions for long awaited improved capital markets
revenues" and that it is constructive on total revenues due to
its expectations for capital markets and asset management.
    However, Reuters reported on Monday that U.S. regional banks
may have a tougher road to growing profits in 2024 as they face
pressure to pay more to depositors versus larger peers while
demand from borrowers may stay subdued.
    With the outlook for interest rates more uncertain, regional
lenders' earnings will be restrained because they are tied into
securities holdings that are losing money on paper instead of
making loans or investing in higher-yielding assets, analysts
told Reuters.
    Meanwhile traders seemed wary of the sector on Tuesday with
the S&P 500 banks index  .SPXBK  last down ~1%.
      
    (Sinéad Carew)
     ***** 
    
        
    FOR TUESDAY'S OTHER LIVE MARKETS POSTS:
    
    BOEING SHARE DIVE A SAVING GRACE FOR SHORT SELLERS - ORTEX -
CLICK HERE
    
    DATA: TRADE GAP NARROWS, SMALL BUSINESS OWNERS LIGHTEN UP,
CONSUMERS MAX IT OUT - CLICK HERE
    
    'MAGNIFICENT' RETURNS FOR SHORT SELLERS AS 2024 BEGINS -
CLICK HERE
    
    WALL STREET OPENS LOWER - CLICK HERE
    
    EQUITIES IN 2024: FROM LESS TO MORE - CE - CLICK HERE
    
    TECH ON THE BACK FOOT VS BANKS - CLICK HERE
    
    A CASE FOR CAUTION AS GOLDILOCKS BECKONS - CLICK HERE
    
    STOXX SINKS AS BANKS AND TECH DRAGS - CLICK HERE
    
    EUROPEAN STOCKS EYE STRONG START - CLICK HERE
    
    NIKKEI HITS POST-BUBBLE PEAK ON WALL STREET'S LEAD - CLICK
HERE
    
     


    
    
    
    
    
    
    

 (Terence Gabriel is a Reuters market analyst. The views
expressed are his own)