Image source: Felix Lipov © 123RF.com
Major financial institutions in the US are scheduled to report their earnings for the quarter ending December 2019 this week, which marks the commencement of the earnings season for 2020.
The most prominent companies that are going to report quarterly earnings this week are JPMorgan Chase & Co.; Citigroup Inc.; Bank of America; Goldman Sachs Group Inc.; and Morgan Stanley.
All of the stocks of these major banks are listed on the S&P 500, which is why heightened volatility and substantial price swings on the index are expected to take place by the end of Friday’s trading session.
Out of these six companies, JPMorgan Chase and Co. has the most significant weight in the S&P 500, which means that its earnings report is likely to have the most significant impact on the price of the index.
Coincidently, market analysts project the most significant Earnings per Share to be reported by JPMorgan, which is likely to prompt further strengthening of the SPX beyond its current record-breaking level of 3281.
According to the consensus forecasts, the financial giant is anticipated to report EPS of $2.31 for Q4 of 2019, which would markedly exceed the recorded $1.98 EPS for the same period a year before.
If, however, the company fails to live up to these expectations, the price of the index is likely to take a hit from the significant disappointment that would be the end result.
Currently, JPMorgan Chase is the sixth most prominent company listed on the S&P 500, which is why its earnings reports are especially important.
Meanwhile, the most significant disappointment is forecasted to be registered by Goldman Sachs, which EPS for Q4 of 2019 are projected to decrease to $5.18 from $6.04 a year before.
Nevertheless, Goldman Sachs is ranked on the 79th spot on the SPX, which is why the index is unlikely to be hit especially hard because of the company’s marginal weight factor.
Overall, three of the financial institutions are projected to report improvements in their EPS, whereas three are likewise expected to report deteriorations in their earnings.
The conclusion of this first week of the new earnings season is going to shed light on the consequences of the 'ceasefire' in the US/China trade war, that was observed towards the end of 2019.
Additionally, the recorded performance of these major financial institutions is going to be indicative of the FED’s monetary policy and its reluctance to reduce the interest rate further below its current rate at 1.75 per cent.
Meanwhile, the price of the SPX is currently trading on a major bullish trend as indicated by the ascending order of the three Moving Averages.
SPX 1M Price Chart. Image source: Trendsharks ©, created with TradingView.com
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