JPMorgan Chase & Co. led a surge in major bank shares after the largest US lender boosted its guidance for a key profitability driver for the year.
(Bloomberg) — JPMorgan Chase & Co. led a surge in major bank shares after the largest US lender boosted its guidance for a key profitability driver for the year.
The stock soared 7.6% on Friday for its best day since November 2020, to beat all of its S&P 500 Index peers. Bank of America Corp., Morgan Stanley, and Goldman Sachs Group Inc. joined the rally, while the KBW Bank Index climbed by the most in three weeks.
The rally deepens the disparity between the stocks of the nation’s largest lenders and regional peers, with the latter still stinging from a recent series of failures that rattled investors. Investors had been steering clear of the financial sector overall amid the turmoil, leaving the stocks cheap.
“Goliath is really really winning,” Wells Fargo analyst Mike Mayo wrote in a note to clients. “There is no evidence of a banking crisis except that it seems that JPM has been a port in the storm.”
JPMorgan reported an unexpected increase in deposits and boosted its guidance for NII — a key driver of profitability tied to loan operations.
Shares of Citigroup Inc. gained 4.8% after its NII beat estimates. Wells Fargo & Co.’s stock closed little changed after it pointed to a 45% jump in its NII in the quarter.
It’s an indication that the country’s biggest lenders are seeing a benefit from the Federal Reserve’s aggressive interest-rate hikes.
That all comes in sharp contrast to the scene at smaller, regional banks. The KBW Regional Banking Index dropped by 2.2% on Friday, extending the year’s losses to 22%.
The class of American financial institutions fell under pressure earlier this year amid collapses at Silicon Valley Bank and other regional lenders. As earnings season rolls around, investors are now left with a critical eye toward the industry’s health.
PNC Financial Services Group, a Pittsburgh-based lender, finished the day with a narrow gain after its revenue forecast came in below analysts’ expectations.
(Updates throughout to market close.)
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