|Bid||0.00 x 41800|
|Ask||28.11 x 312500|
|Day's Range||27.78 - 28.11|
|52 Week Range||22.05 - 29.07|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||1.09|
|Expense Ratio (net)||0.13%|
This week marked the start of the bank earnings season. Coming into it, I favored owning three bank stocks: JP Morgan (NYSE:JPM), Bank of America (NYSE:BAC) and Square (NYSE:SQ).The reactions to JPM and BAC earnings were tentative. So the opportunities there remain intact. The third hasn't yet reported, so the SQ stock price continues to hold its own for the bulls.So in light of the recent reports, are they still good to buy at these levels? The short answer is, yes.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSo, today, I reiterate the reasons why and I also add Citigroup (NYSE:C) to the list of banks to own for the long term.The first few days of the earnings season are muted and did not yet erase the predominant idea that bank stocks are boring and cannot rally. So the investment in them now should continue to be under the assumption that it's for the long term. So What About Their Environment?Contrary to popular belief, banks stocks do perform in lockstep with the general equity markets. Year-to-date JPM and BAC are up just as much as the S&P 500 and Citigroup stock is up double that.In addition, since all of them passed their stress test, they are all committed to defending their own stock prices with financial engineering.They will increase dividends and buy back their own shares so the efforts from the sellers will have to go against a tremendous headwind of cash flow from the banks themselves.The U.S. Federal reserve and other central banks have wreaked havoc with banks' ability to conduct business. They keep manipulating the interest rates and this creates tremendous confusion, especially on Wall Street.Most investors believe that banks need higher rates to profit, but that is not true. Money center banks need a wide spread between short- and long-term rates to profit.So the recent commitment from the Federal reserve to lower short-term rates should invite more lending activity and at a wide spread. Banks borrow short term to lend us long term. So I am not worried about their business models this year. * 10 Best Cryptocurrencies to Keep on Your Radar With that in mind, let's dive a bit deeper into what makes these three stocks to buy. JP Morgan Chase (JPM)Source: Shutterstock Perception on Wall Street is that JPM is the best of the best. Fundamentally it's cheap as it sells at a price-to-earnings ratio of 12x. The book value fluctuates from 1.2 to 1.6, so it's not likely to be a financial debacle to own it here. In addition, JP Morgan stock pays a respectable 2.8% dividend.The management team is a proven winner. They survived the worst financial crisis of the modern era, so they've seen a few hard days. The regulations that followed the 2008 financial crisis made it so that their balance sheets are bullet proof. Recently, JP Morgan recommitted to more capital return via buybacks and dividends.In addition to the value below, JPM stock is trading inside a tight range. It has support at $112 and $110 per share and a neckline at $116.5, above. Technically, this makes for a breakout opportunity since the bulls have been setting an ascending trend of higher lows while knocking at a resistance zone. If they can break through the resistance zone above, then they can overshoot higher and mount a $9 rally.I would own the shares here for this short-term opportunity and/or for the long-term equity investment. Either way, I think JPM stock is a winner.For those who like to trade options there is also the possibility to sell put spreads at the support levels for August and/or buy calls just above the current price. The combination would be cost neutral thereby offering an opportunity to profit with no out-of-pocket expense.The JPM earnings report did not add any new worries so the ongoing fundamentals still favor the long-term bullish thesis than the short. Bank of America (BAC)Source: Shutterstock The fundamentals for BAC stock are very similar to those of JP Morgan. The stock on the other hand trades in a much tighter range. Case in point, in the last few weeks, the Bank of America stock price is ping-ponging inside a $1 wide box and this includes the reaction to an earnings event.BAC sells at a 10.8 P/E and 1.1 times sales, so it's even cheaper than JPM stock. Management is also beyond reproach since they not only survived the crisis but also saved a few banks along with it.Since BAC trades in a tight bunch, I prefer to trade it via options. I like to sell puts into dips and what others fear. It's a low-priced ticker, so I don't mind being out of the stock if one of those trades temporarily fails. Over the long term it will work out. This way I generate income without any out-of-pocket expense.For example, if I sold the Jan $25 puts before the earnings they now are almost 20% cheaper to close the position. The stock only moved up 2% in comparison. And in my scenario, I risked no money out of pocket.It is important to note that I don't sell naked puts unless I am willing and able to own the shares.Since BAC stock is now tight, technically it too has an opportunity to breakout. The bulls need to overcome the current resistance level, so they can target $31.2, which was the fail of April 29. * 7 Battery Stocks for High-Powered Gains Here too the Bank of America earnings report did not change the overall bullish thesis on the stock. Citigroup (C)Source: Shutterstock Citigroup's reactions to earnings was negative. Since then, the C stock price has traded inside that earnings day candle. So, technically, I note the edges of it as short-term catalysts. Meaning that any breach of its sides would carry some momentum in that direction.So if the bulls can beat $72, they can target $76 per share. Conversely, if the sellers can break below $70, they can target $68 per share.Either way, it would be an exercise in short-term trading and won't change the long-term bullish thesis on the stock. Citigroup stock, for the long term, remains a "BUY" in my book and the experts on Wall Street agree since it has very few HOLD and almost no SELL ratings.So which one is best?They are all quality stocks to buy, but from a 2019 perspective, C stock has the best score. Logic says to stick with the winner.However, of the three banks today, C is my least personal favorite. This is nothing against its own fundamentals and more so my worry over its exposure to international situations. Specifically the chatter surrounding its exposure to entities like Deutsche Bank (NYSE:DB) for example. I don't have anything concrete, but if there is a rumor, then there must be some truth to it, and I don't want the surprise of finding out one day.In summary, I can confidently state that the major U.S. banks are almost all stocks to own almost at any time, while they carry their current fundamentals. JPM, BAC and C stock have so much value below that they make the bearish scenario seem shallow at its worst.Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room free here. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post 3 Bank Stocks to Buy After Earnings Headlines appeared first on InvestorPlace.
Many investors watch the headlines like hawks, but moves in the market aren't as dependent on those as many people think. More often, stock market moves are due either to noise or to how markets react when they reach important levels. And considering those, Amazon (NASDAQ:AMZN) and these six SPDR ETFs are telling me that the rally is over for now.For an example of noise, suppose a person deposits money into a mutual fund at the same time that another person withdraws twice as much. The traders at this mutual fund will now need buy stocks to invest the deposit. At the same time, they will need to sell twice as many shares of the same stocks to raise the funds for the withdrawal. This will cause the prices to go lower. This happens thousands of times across the world every hour of every day. You can understand how it could move the markets.Then there's the reaction the various sectors have when they get to important levels. For example, I think this rally is over for now because most of the economic sectors that make up the S&P 500 are at or just under resistance.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip In addition, the consumer discretionary sector has been one of the leaders of the recent rally and it is losing momentum. AMZN is the largest component of this sector and it is overbought and at resistance.First, we will look at some sectors and you will see what I mean. Then we'll go over levels in Amazon stock. And lastly, we will look at the SPY. Industrial Sector SPDR (XLI)The Industrial Sector SPDR (NYSE:XLI) is testing resistance at the $78.50 level. You don't need to be a Market Guru or a Master Trader to see that this level is important. It was resistance at the end of April and in early May.According to academics and random-walk believers, support and resistance levels shouldn't exist. After all, how can a basket of dozens of stocks have the same exact valuations at two very different points in time?But support and resistance levels obviously exist. You do not need to have a PHD to see them. Financial Sector SPDR (XLF)The Financial Sector SPDR (NYSE:XLF) is testing resistance around the $28 level. This level was resistance in April.During last August and September, the financial sector did not participate in the rally. That was one of the key signals that the market was nearing a major top. * 7 Dependable Dividend Stocks to Buy This shows why it is important to examine the undercurrents in the markets in order to really understand how to profit. Last summer the media was going crazy over the bull market, just like now. There was talk of melt-ups and amazing new records. However, savvy investors saw the underlying weakness in the financials and knew that this was a signal that the rally was about to end. Health Care Sector SPDR (XLV)The Health Care Sector SPDR (NYSE:XLV) has been consolidating around resistance at the $93 level and it may be starting to trend lower. The $93 level was resistance in February as well. One of the main reasons for this is that Johnson and Johnson (NYSE:JNJ) is 10% of this sector and some analysts think the company is facing some significant headwinds.JNJ just reported earnings that were better than analysts expected, and yet the stock price still dropped. This is probably because JNJ is being sued for its role in the opioid crisis, and investors are worried about the outcome. It is also being sued for allegedly selling dangerous talcum power for babies.I am not a lawyer and won't guess what the ultimate outcome of these lawsuits will be. What I do know is that even if JNJ stock is innocent of these accusations, it will still incur significant legal costs and damage to its reputation. Utilities Sector SPDR (XLU)The Utilities Sector SPDR (NYSE:XLU) has been testing resistance around the $28 level over the past month. This sector typically pays higher dividends than most others. Because of this, there has been more interest than usual in this sector due to the action of the yield curve.The yield curve illustrates the yield on bonds of all different durations. The vast majority of the time, the longer the term of the bond, the higher the rate of interest that it will pay. This is simply because the longer the timeframe, the greater the odds are that the bond will default. In order to take on this extra risk, investors need a higher return. * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond When the yield curve inverts, it means that shorter-term rates are actually higher than long-term rates. This is typically an indication that traders are bearish on the economy. They do not want to hold short-term bonds. They sell, and this drives down the price and makes the interest rates go up. Then they buy long-term bonds and makes the price rise and the yield fall. Consumer Discretionary Sector SPDR (XLY)The Consumer Discretionary Sector SPDR (NYSE:XLY) has been one of the leaders of the recent rally. However, the sector is now very overbought. The last time it was this overbought was in April, and a large move lower followed. A big part of the reason for this is AMZN stock. Amazon is about 20% of this sector, and it is at resistance.If the XLY heads lower, there will probably be support around the $121 level. This because this level was resistance in April and June.What does the term "overbought" mean? It is a measure of a stock's momentum, looking at where the price is now versus where it was X days ago. When stocks reach extremes of this measurement, traders refer to it as overbought or oversold.For example, according to statistics, 95% of all trading should be within two standard deviations of the average. If a stock is trading more than two standard deviations above or below the average, it would be considered overbought or oversold. It will most likely revert back to its average. Amazon (AMZN)Amazon is overbought and testing resistance. The last two times AMZN stock was this overbought were in September and May. A large selloff followed both times. In addition, it is testing resistance around the $2020 level. There is resistance at this level because it was the top and an all-time high last September. Stocks frequently run into resistance when they get to levels that were prior tops. * 10 Stocks Driving the Market to All-Time Highs (And Why) There is also excessive bullish sentiment on AMZN. Currently, 47 Wall Street firms follow it and every single one has a buy rating on it. Excessive bullish sentiment is actually a bearish indication. This is because if everyone likes the stock, everyone has bought it. Now there are no buyers left and the only way it can do is lower. S&P 500 SPDR (SPY)The S&P 500 SPDR (NYSEARCA:SPY) is also overbought. If it heads lower, there will probably be support around the $294 level because it was a resistance level in April. Why do resistance levels become support levels? Consider the following.After hitting the resistance at $294 the SPY traded lower. Those who sold it are happy that they sold. Those who shorted it have a profit. But then the SPY rallied. Now those who sold it tell themselves that if the SPY comes back to $294, they will buy it back. Those who shorted it are now losing money. They tell themselves they will cover it at $294 and break even.Those who bought it at $294 are happy that it went higher and tell themselves that if the SPDRs come back they will buy more. Add to that the professional traders who see a clear level and want to profit from it, and now we have 4 groups of investors who want to buy the SPYs at $294.As of this writing, Mark Putrino did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post These 6 SPDR ETFs and Amazon Tell Me the Rally Is Over appeared first on InvestorPlace.
Bank of America Corp. announced Wednesday a plan to return $37 billion to shareholders over the next 12 months, through share repurchases and dividends. As part of that plan, the money-center bank said it plans to increase the quarterly dividend by 20%. Based on Tuesday's stock closing price of $28.99 and the current dividend of 15 cents a share, a 20% increase would imply a quarterly dividend of 18 cents a share, an annual dividend rate of 72 cents a share and a dividend yield of 2.48%. That's above the implied yield for the SPDR Financial Select Sector ETF of 1.95% and for the S&P 500 of 1.93%. The plan also includes more than $30 billion in gross stock buybacks, which represents more than 10.9% of the shares outstanding. That would be an increase from the past 12 months, in which the bank repurchased 7% of its shares outstanding. BofA's stock fell 0.3% in premarket trading, after the bank reported second-quarter earnings that topped expectations but revenue that came up a bit short.
Shares of Bank of America Corp. dropped 0.7% in premarket trading Wednesday, after the bank reported a second-quarter profit that beat expectations but revenue that came up a bit short. Net income rose to $7.11 billion, or 74 or cents a share, from $6.47 billion, or 63 cents a share, in the same period a year ago. The FactSet consensus for earnings per share was 71 cents. Total revenue increased 2.4% to $23.08 billion, just below the FactSet consensus of $23.11 billion, while net interest income rose 3.1% to $12.19 billion but missed expectations of $12.36 billion. Consumer banking revenue grew 5.2% to $9.72 billion, while the range of two analysts surveyed by FactSet was $9.61 billion to $9.64 billion. Global markets revenue fell 2.5% to $4.15 billion, as sales and trading revenue declined 6% to $3.2 billion. Elsewhere, global banking revenue declined 0.8% to $4.98 billion and global wealth and investment management revenue increased 3.3% to $4.90 billion. The stock has run up 17.7% year to date through Tuesday, while the SPDR Financial Select Sector ETF has climbed 17.9% and the Dow Jones Industrial Average has hiked up 17.2%.
Wells Fargo & Co.'s expected dividend increase would boost its implied dividend yield to more than double its financial-sector peers and the broader stock market. Wells Fargo said in its second-quarter report that after receiving a "non-objection" to its capital plan submission from the Federal Reserve, the bank expects to raised its quarterly dividend by 13% to 51 cents a share from the current rate of 45 cents a share. Based on current stock prices--down 0.3% at $46.59--the new annual dividend rate of $2.04 would imply a dividend yield of 4.38%. That compares with the current implied dividend yields of 1.94% for the SPDR Financial Select Sector ETF and the S&P 500's implied yield of 1.92%, according to FactSet. Wells' stock has lost 18.1% over the past 12 months, while the financial ETF has gained 2.7% and the S&P 500 has advanced 7.7%.
Shares of Goldman Sachs Group Inc. surged 1.2% in premarket trading Tuesday, after the investment bank reported second-quarter earnings and revenue that fell, but were well above expectations, and raised its dividend by 47%. Net income declined to $2.20 billion, or $5.81 a share, from $2.35 billion, or $5.98 a share, in the year-ago period. The FactSet consensus was $4.89. Total revenue fell 2% to $9.46 billion, but beat the FactSet consensus of $8.84 billion, as better-than-expected non-interest income offset a slight miss in net interest income. Institutional clients services revenue declined 2.6% to $3.48 billion, as FICC client executive revenue fell 12.5% to $1.47 billion while total equities revenue increased 6.1% to $2.01 billion. The FactSet consensus for institutional client services revenue was $3.33 billion. Investment banking revenue declined 8.9% to $1.86 billion, above the FactSet consensus of $1.77 billion, and investing and lending revenue rose 16% to $2.53 billion to top expectations of $2.00 billion. Goldman raised its quarterly dividend to $1.25 a share from 85 cents, with the new dividend to payable Sept. 27 to shareholders of record on Aug. 30. The stock has run up 26.7% year to date through Monday, while the SPDR Financial Select Sector ETF has rallied 18.2% and the Dow Jones Industrial Average has climbed 17.3%.
Financial stocks and sector-related exchange traded funds were under the microscope Monday as bank stocks kicked off the second-quarter earnings season, with Citigroup (NYSE: C) posting its latest quarterly ...
Shares of Citigroup Inc. rallied 0.8% toward a 9-month high in premarket trading Monday, after the bank reported a second-quarter profit and revenue that rose above expectations, although net interest income came up shy. Net income rose to $4.80 billion, or $1.95 a share, from $4.49 billion, or $1.63 a share, in the same period a year ago. Earnings per share from continuing operations was $1.94. The FactSet EPS consensus was $1.81. Total revenue increased 2% to $18.76 billion, above the FactSet consensus of $18.50 billion, while net interest revenue rose 2% to $11.95 billion, or just below expectations of $12.03 billion. Consumer banking revenue grew 3% to $8.51 billion, just shy of the FactSet consensus of $8.58 billion, while institutional clients revenue inched up to $9.72 billion from $9.70 billion, topping expectations of $9.61 billion. Allowance for loan losses increased to $12.5 billion, or 1.82% of total loans, from $12.1 billion, or 1.81% of tal loans. The stock, on track to open at the highest price seen during regular-session hours since October 2018, has run up 37.9% year to date through Friday, while the SPDR Financial Select Sector ETF has hiked up 18.9% and the Dow Jones Industrial Average has advanced 17.2%.
Shares of Charles Schwab Corp. fell 1.1% in morning trading Friday, enough to pace the S&P 500's financial-sector decliners, after BofA Merrill Lynch downgraded the discount broker, citing a tougher revenue and margin outlook given expectations that the Federal Reserve will lower interest rates. Analyst Michael Carrier cut his rating to neutral from buy, and dropped his stock price target to $43 from $49. Carrier said Schwab's revenue engine over the past few years has been net interest margin (NII), which would decline if the Fed lowers its target on overnight interest rates, as is widely expected. "While we believe some of this risk is priced into the shares at the current valuation, we see more downside risk to estimates ahead," Carrier wrote in a note to clients. The stock has shed 12% over the past three months, while the SPDR Financial Select Sector ETF has gained 3.7% and the S&P 500 has tacked on 3.4%.
Cheaper valuation, better earnings growth prospects, solid performance in Stress Test, dividend hike announcements and less chances of a rate cut should position financial ETFs in a good spot in 2H.
Results from the Federal Reserve's Comprehensive Capital Analysis and Review (CCAR) will pave the way for major U.S. banks to deliver higher dividends to investors, meaning yields on the financial services sector are expected to climb. The Financial Select Sector SPDR (XLF) , the largest financial services ETF, recently yielded just over 2%.
Financial stocks were the only one of 11 S&P 500 sectors showing gains Friday morning, after a better-than-expected jobs report led to a rise in bond yields, due to greater optimism toward the health of the U.S. economy. Financial stocks, as measured by the Financial Select Sector SPDR Fund added 0.3%, while the Dow Jones Industrial Average , S&P 500 index and Nasdaq Composite index were all down more than 0.5%. Top performers Friday morning include Goldman Sachs Group Inc. , JP Morgan Chase & Co. , Citizens Financial Group Inc. and Regions Financial Corp. . The yield on the 10-year U.S. Treasury note rose 10 basis points to 2.051% after the Labor Department said Friday morning that the U.S. economy added 224,000 new jobs in June, above economists expectations of 170,000, per a MarketWatch poll. The report showed job gains in every sector of the economy, while wage growth held steady at 3.1% year-over-year. Financial shares have helped lead stocks higher over the past three months, up 5.6% since early April, according to FactSet.
With the S&P 500 and Dow at all-time highs, it's been a great year for every stock market sector, and margin debt levels have room to grow.
Technically speaking, the S&P 500 has reached all-time highs to start July against a comfortably bullish bigger-picture backdrop, writes Michael Ashbaugh.
The results of the Federal Reserve’s Comprehensive Capital Analysis and Review, or CCAR, are in and the stage is now set for major U.S. banks to boost shareholder reward programs, including share buybacks ...
The Federal Reserve gave banks the green light to offer more payouts to investors after 18 of the largest financial firms passed the second round of stress tests designed to assess the health of the financial system. For financial sector bulls, this could boost the Direxion Daily Financial Bull 3X ETF (FAS) . FAS seeks daily investment results worth 300 percent of the daily performance of the Russell 1000 Financial Services Index.
U.S. retail sales beat expectations in June, climbing 0.4% last month. Jimmy Lee, CEO of The Wealth Consulting Group, joins Seana Smith on 'The Ticker' to discuss.
Earnings season is almost here with big banks like JPMorgan, Citigroup, and Bank of America set to report next week. Yahoo Finance's Seana Smith and Brad McMillan, chief investment officer at Commonwealth Financial Network, discuss what to expect and whether it could end the market rally.
Fed chair Jay Powell testified before congress, fueling optimism that the central bank will cut rates later this month. Yahoo Finance's Seana Smith and Brian Cheung, Wells Fargo Global Economist Jay Bryson, and Chair of Monetary Policy at the Mercatus Center Scott Sumner discuss.
Fed Chair Jay Powell is heading to Capitol Hill. Investors are watching as he is set to testify before the House Financial Services Committee and Senate Banking Committee this week. Yahoo Finance's Seana Smith and RDQ Economics Chief Economist John Ryding discuss.
The June jobs report crushed expectations and that's raising some questions about whether or not the Fed is going to cut rates later this month. This as trade tensions between the U.S. and China loom over investors. Yahoo Finance's Seana Smith and Moody's Capital Markets Chief Economist John Lonski discuss.
224,000 jobs were added last month, smashing economists' estimates of 160,000. This coming as President Trump doubled down on his views for the Federal Reserve to slash interest rates. Deutsche Bank Securities Chief Economist Torsten Sløk joins Yahoo Finance's Seana Smith.
June and July are historically lackluster months for stocks, but with the Dow posting its best June since 1938, July may have the potential to buck the trend too. Yahoo Finance's Seana Smith and managing editor of ETF.com, Cinthia Murphy discuss.