U.S. equities are holding with modest gains on Friday after a surprisingly strong July jobs report. The unemployment rate fell to 4.3% as the labor market tightens further. Payrolls expanded by 209,000, above the 178,000 analysts were looking for.
While stocks are largely shrugging off the news, currencies and bonds aren’t: The data resulted in a big reversal in the U.S. dollar (which has been suffering persistent weakness lately) and a decline in long-term Treasury bonds (pushing down yields).
Bank stocks are perking up in response, threatening an upside breakout from a multi-month consolidation range on hopes the rise in interest rates — driven by higher inflation and economic growth expectations — will translate into an expansion of net interest margins and thus Wall Street profits.
Here are three bank stocks on the move.
Bank Stocks Getting a Jobs Boost: Bank of America (BAC)
Bank of America Corp (NYSE:BAC) shares are making another run at the $25-a-share level — which has marked the upper-end of a sideways stasis in play in December — continuing a three-month short-term uptrend. The rise has kicked the August $25 BAC calls recommended to Edge Pro subscribers to a gain of 20%.
The company will next report results on Oct. 17 before the bell. Analysts are looking for earnings of 47 cents per share on revenues of $22.3 billion. When the company last reported on July 18, earnings of 46 cents per share beat estimates by 2 cents on a 7.1% rise in revenues from the year-ago period.
Results were boosted by an ongoing recovery in credit quality as net charge offs declined 8% to $908 million.
Bank Stocks Getting a Jobs Boost: Morgan Stanley (MS)
Morgan Stanley (NYSE:MS) shares are breaking above $48, leaving their February/March highs behind to hit levels not seen since late 2007. That’s right: After nearly a decade, MS has erased the worst of its financial crisis losses. The all-time high of $64.28 lies 33% to the upside still, but it’s an incredible milestone nonetheless.
The company will next report results on Oct. 18 before the bell. Analysts are looking for earnings of 84 cents per share on revenues of $9.1 billion. When the company last reported on July 19, earnings of 87 cents per share beat estimates by 10 cents on a 6.7% rise in revenues from the year-ago period. Investment banking revenue jumped $300 million to $1.4 billion.
Bank Stocks Getting a Jobs Boost: JPMorgan Chase (JPM)
JPMorgan Chase & Co. (NYSE:JPM) shares are challenging their early July high of $94, setting up a breakout to new all-time highs. In contrast to the other stocks on this list, the company has more than doubled its pre-recession share price and is up a whopping 657% from its financial crisis low. A good chunk of the gains have come since Election Day with JPM shares up nearly 50% from their September low.
JPM will next report results on Oct. 13 before the bell. Analysts are looking for earnings of $1.7 per share on revenues of $25.2 billion. When the company last reported on July 14, earnings of 23 cents per share beat estimates by 23 cents on a 4.6% jump in revenue with an 8% increase in average core loans. Net interest income also rose 8% on the combination of rising interest rates and loan activity.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
