It is a big week for financial sector exchange traded funds as five prominent Wall Street banks are ready to report fourth quarter earnings.
Specifically, J.P. Morgan Chase & Co (NYSE: JPM) and Wells Fargo & Company (NYSE: WFC) will reveal fourth quarter earnings results on Wednesday, January 14. On Thursday, January 15, Bank of America Corporation (NYSE: BAC) and Citigroup (NYSE: C) will issue their results. Goldman Sachs Group (NYSE: GS) will round the group on Friday, January 16. Additionally, Morgan Stanley (NYSE: MS) will kick off earnings next week on January 20.
The six banks make up a combined 31.5% of the Financial Select Sector SPDR (NYSEArca: XLF). XLF has increased 11.2% over the past year.
According to analysts polled by Thomson Reuters, corporate earnings are expected to rise 4% over the fourth quarter year-over-year, reports Jessica Menton for International Business Times. However, analysts don’t expect any large surprises out of the financials area. [A Tepid Year for Bank ETFs]
John Butters, senior earnings analyst at FactSet, even believes that financial earnings for the fourth quarter may have only increased a downwardly revised 1.1%, compared to 1.6% growth estimates at the end of the quarter and 8.4% at the start of Q4, reports Wallace Witkowski for MarketWatch.
“During the last two quarters, the banks have beat on [earnings per share], but missed on revenues,” Josh Van Dress, chief investment officer at Abel Capital Management, said in the IBT article. “Sadly, it’s going to be a lot of the same again. Because of that, we’re going to have a lot of volatility in the financial markets for some time to come.”
Additionally, the banks had to issue some write downs after the U.S., Britain and Switzerland placed $3.4 billion in fines on UBS Holdings, Citigroup, JPMorgan, Royal Bank of Scotland, HSBC Holdings and Bank of America in November.