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The S&P 500 Banks Industry Group Index dropped just 6% for the third quarter, with the overall market continuing to be under pressure amid rising inflation levels and interest rates. With the release of big bank earnings from Bank of America and Goldman Sachs this week, analysts believe that we could see a strong rebound in the overall equity markets.
How inflation impacts banks’ earnings
Higher inflation generally leads to increased interest rates, with banks making more money from the difference in the interest rates it pays on deposits and the money it earns on lending. With the recent quarter seeing sharp rate hikes amid surging inflation, there could be some positive momentum for bank stocks.
What are the expectations from these banks?
US bank earnings kickstarted last week, with JP Morgan Chase, Wells Fargo, Citigroup and Morgan Stanley reporting their earnings.
Bank of America last released its earnings results on July 18, with the financial services company missing the earnings estimates for the quarter. The bank recently disclosed a quarterly dividend, which was paid on September 30. Bank of America is expected to report quarterly earnings of $0.78 per share, down from $0.85 per share last year. Revenue is expected at $23.53 billion for Q3. Bank of America will release earnings on October 17, 2022.
The Goldman Sachs Group last reported upbeat quarterly earnings results on July 18, with EPS of $7.73. The firm’s quarterly revenue, however, dropped 22.9% year-over-year. Goldman Sachs is expected to have earned $7.71 per share in Q3, down from $14.93 per share in the same quarter a year ago, on revenue of $11.43 billion. The company is scheduled to report its earnings results on October 18, 2022.
Trading the earnings reports
You can trade earnings reports in several different ways. You could directly trade stocks on the exchange or trade via Share CFDs. You could also choose to diversify your trades by trading indices or ETFs that track banking stocks.
Are you ready to make the most of market opportunities from the upcoming earnings reports?
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