Banks and Financials Should Sway the S&P 500
The Federal Reserve’s stress test results were announced after the closing bell last night. With the exception of Deutsch Bank which failed miserably, regulators signaled approval to the vast majority of some 30 or more of the largest US banks.
Goldman and Morgan Stanley did not fair as well. These two firms must keep capital return plans unchanged after Fed stress test. Buybacks and dividend increases might be impacted.
Banks – Dividends and Buybacks Will Resume
JPMorgan Chase (JPM) announced a 43% dividend hike and plans to buy back nearly $21 billion in stock. JPM has scheduled its dividend payout for July 5. The 43% increase will affect our common shares handsomely. (0.56 x 0.43% = 0.80).Earnings are scheduled to be announced Friday, July 13.
Technically speaking, the stock needed a catalyst to push off of support. Now it has several.
That said, JPM needs to breakthrough 117.50 to signal a breakout and resumption of trend. Second half results are historically better, so that kind of move could start with these results.
“Citigroup (C) said it will boost its dividend by 41% and buy back up to $17.6 billion worth of shares. Wells Fargo (WFC) raised its dividend modestly and said it plans to buy back $24.5 billion of stock through mid-2019.” – CNN Money
Financials and S&P 500 should be affected by the results. If banks fail to respond, we would view it as a negative for the markets short-term.
NIKE reported stellar results after the bell. (+10.53% in early trading)
Stay tuned. We’ll be LIVE at 9:20 AM. Join us for the LIVESTREAM Broadcast.
Happy Trading,
Vinny
PS It occurred to me that some members are not receiving “trade alerts”. If you’re affected and not using the desktop, make sure you download the appropriate “SLACK” app to your mobile phone. Apple Store etc.
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