Big Banks to Kick Off Q3 Earnings Season Amid 20-Year High Yields: What to Expect

Q3 earnings season shifts into high gear this upcoming Friday as financial giants of the likes of JP Morgan (NYSE:JPM), BlackRock (NYSE:BLK), and Wells Fargo (NYSE:WFC) release their financial results for the quarter marked by a jump in treasury yields.

JP Morgan's outlook is particularly optimistic, with the bank poised for yet another quarter of EPS growth. This reflects the bank's strong financial standing, evident not only in its earnings but also in its stock price, which continues its upward trajectory, even in the face of broader market corrections.

Meanwhile, earnings estimates for BlackRock and Wells Fargo, on the other hand, don't paint a positive picture. Their charts show their stocks testing technically significant areas and no definite upward trend.

As we await these earnings reports, it's worth keeping a close watch on US inflation data. This data will be crucial in determining the Federal Reserve's next decision on interest rates, making it a critical factor for the broader market's direction.

JP Morgan: Stock's Recent Correction a Buying Opportunity?

Examining the earnings per share (EPS) ratio curve on the chart, we can observe steady growth over the past year, suggesting the potential for continued positive results with the Q3 earnings report expected this Friday.

Additionally, it's worth highlighting that there have been 10 upward analyst revisions, with no downward revisions, indicating a positive sentiment surrounding the bank's performance.

JPM Upcoming Earnings

Source: InvestingPro

The underlying financial data reaffirms the strong fundamentals of this financial giant. It indicates a consistent improvement in net profits and revenue since Q2 2022, and this positive trend has been evident since Q1 2022.

JPM Net Income to Company

JPM Revenue

Source: InvestingPro

The bank is undoubtedly benefiting from relatively high rates, and even if the rates are not raised further, the expectation is that they will remain at their current levels for an extended period, as per the Fed's narrative.

BlackRock: Could Stock Head Below $630?

BlackRock stands out as the largest asset management and financial advisory service provider. In recent quarters, the company has benefited from the growing interest in ETFs, in which BlackRock holds a significant position.

Additionally, the acquisition of Kreos Kapital, a firm specializing in financing for technology and healthcare companies, is anticipated to bolster BlackRock's position as an international credit asset manager.

As we look ahead to Friday's release, the projected earnings per share stand at $8.47 with revenues of $4.56 billion. These quarterly results could play a pivotal role in defending a crucial support level situated around the $630 area.

BlackRock Daily Stock Chart

Should the demand persist, the initial target for buyers would be the nearby resistance at around $370 per share. Conversely, a shift in the scenario and a break of support could pave the way for lower targets, possibly dropping below $600 per share.

Wells Fargo Stock to Jump Post Earnings

Wells Fargo's Q3 2023 results will be compared to the previous earnings of $1.23 per share and revenue of $20.98 billion.

Examining the stock price's reaction on the day of release, it's noteworthy that over the past 2 years, there has been only one instance of a decline in the stock price. In other quarters, there have been smaller or larger increases, ranging from 2% to 6%.

Stock Price Reaction to Earnings

Source: InvestingPro

It's important to remember this data if you're considering day trading based on the day's results. Another factor favoring the possibility of increases is the fair value index, which has a score of 15%, the highest among the three stocks discussed in this article.

Wells Fargo Fair Value

Source: InvestingPro

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Disclosure: The author holds no positions in the securities mentioned in this report.