Here’s Why Big Bank Stocks Like JPMorgan Are Struggling Despite Solid Earnings

Reports underwhelmed investors and some firms warned about inflationary pressures which could impact future profits as shares of several major banks tanked on Friday.

Jamie Dimon is the CEO of JP Morgan Chase.

The ASSOCIATED PRESS has a picture ofMichel Euler.

Despite beating profit and revenue estimates, shares of the largest U.S. bank lost more than 5% on Friday.

It was the smallest earnings beat in the last seven quarters, and the CFO lowered guidance on company wide returns due to inflationary pressures.

The shares of Citigroup fell 2% after the bank reported solid revenue and profits, but investors were alarmed by the steep drop in profits.

Citigroup blamed rising expenses for the sharp decline in the company's net income in the fourth quarter.
Wells Fargo, the only major bank to report earnings on Friday, saw its shares jump more than 3% after better-than- expected revenue and a large jump in profits.

The latest quarterly results were boosted by an $875 million reserve release which had been set aside to shield against loan losses, according to Wells Fargo.

Bank stocks have performed well in recent weeks, with many analysts predicting upside in the future. Higher rates allow banks to charge more for loans and produce higher yields on cash holdings, which helps boost profit margins. The revenue and profit numbers reported by some major banks on Friday were not as bad as investors might have thought, but the reports seem to have underwhelmed Wall Street.

Vital Knowledge founder Adam Crisafulli predicts that expenses will be a theme over the coming weeks as additional Q4 results get reported. He says that the most important piece of macro news all week is the rising expense guidance from JP Morgan.
Surprising fact.

Wells Fargo was one of the top performing bank stocks last year, surging 59% and beating out the likes of Bank of America and JP Morgan Chase, which rose 25% and 47% in the same time period.

There is a reason why stocks are doing well despite another Dire Inflation Report.

Powell said the Fed wouldn't be afraid to raise rates if inflation goes up.

Ford's market value has increased past $100 billion thanks to hot electric vehicle plans.