Stocks are lifting higher again on Monday as the steady-stage rally to new consecutive highs continues. Investors are collectively shrugging off the North Korean threat despite another ballistic missile launch late last week and warnings from South Korea that further tests are likely forthcoming.
Instead, the focus is on the specter of higher interest rates, higher economic growth and higher corporate earnings.
The first factor is set to get a lift this week when the Federal Reserve wraps up its latest policy meeting on Wednesday. The start of “quantitative tightening” is expected, the process by which the Fed will roll back its bloated $4.4 trillion balance sheet.
This is expected to put upward pressure on long-term interest rates — which translates directly into higher financial sector profitability via wider net interest margins, the gap between deposit and loan rates.
As a result, bank stocks are on the move in a big way. Here are six to watch:
Bank Stocks to Buy: PNC Financial Services (PNC)
PNC Financial Services Group Inc (NYSE:PNC) shares are up some 10% from their early September test below their 200-day moving average, closing back in on its mid-August highs. The company has benefited from some positive analyst coverage, including an upgrade from buy to hold at Rafferty and a resumption of coverage by Wells Fargo.
The bank, based in Pittsburgh, has more than 2,500 branches and 9,000 ATMs.
The company will next report results on October 13 before the bell. Analysts are looking for earnings of $2.13 per share on revenues of $4.1 billion. When the company last reported on July 14, earnings of $2.10 per share beat estimates by eight cents on a 7% rise in revenues.
Bank Stocks to Buy: Morgan Stanley (MS)
Morgan Stanley (NYSE:MS) shares are up nearly 10% from their test of the 200-day moving average earlier in the month — a level that hasn’t been broken (from the upside to the downside) since the summer of 2015. Shares were recently upgraded to buy by analysts at HSBC Securities.
The company will next report results on October 19 before the bell. Analysts are looking for earnings of 83 cents per share on revenues of $9.1 billion.
When it last reported results on July 19, earnings of 87 cents beat estimates by 10 cents on a 6.7% rise in revenues.
Bank Stocks to Buy: Citigroup (C)
Citigroup Inc (NYSE:C) shares are breaking out of a four-month consolidation range to test the $71-a-share level for the first time since 2009. That closes in on a 10% gain from the lows set earlier this month. Shares were recently upgraded by Societe Generale analysts from sell to hold on the prospects of
Shares were recently upgraded by Societe Generale analysts from sell to hold on the prospects of capital return to shareholders.
The company will next report results on October 12 before the bell. Analysts are looking for earnings of $1.31 per share. When it last reported on July 14, earnings of $1.28 beat estimates by seven cents on a 2% rise in revenues.
Bank Stocks to Buy: Bank of America (BAC)
Bank of America Corp (NYSE:BAC) shares are closing in on its 2017 highs near $25.50 up more than 10% from the lows set in June. Investors are focusing intently on the specter of higher net interest margins; shrugging off warnings from big bank executives that trading revenue is being dragged lower amid a lack of volatility.
BAC officials told the Barclays Financial Services Conference last week that they expect Q3 trading revenue to decline 15% from last year.
The company will next report results on October 13 before the bell. Analysts are looking for earnings of 47 cents per share on revenues of $22.2 billion. When it last reported on July 18, earnings of 46 cents per share beat estimates by two cents on a 7.1% rise in revenues.
Bank Stocks to Buy: JPMorgan (JPM)
JPMorgan Chase & Co. (NYSE:JPM) shares fell near its 200-day moving average, as they did back in June, before rebounding strongly to move to the upper end of a three-month consolidation range. Investors have enjoyed a nice ride, with prices up 50% from the lows hit last summer.
Like the other names here, investors are ignoring management warnings on trading revenues: Officials expect results to be down 20% in the third quarter from last year.
The company will next report results on October 12 before the bell. Analysts are looking for earnings of $1.67 per share on revenues of $25.02 billion. When the company last reported on July 14, earnings of $1.82 per share beat estimates by 23 cents on a 4.6% rise in revenues.
Bank Stocks to Buy: Wells Fargo (WFC)
Wells Fargo & Co (NYSE:WFC) shares are climbing off the third downside attempt at the $50-a-share level so far this year, making a run at the 50-day moving average that it lost in early August.
The company has been under pressure amid the continued fallout from the “fake accounts” scandal. Amid industry-wide buying interest, watch for a run at the early March high near $59 which would be worth an 11% gain from here.
The company will next report results on October 13 before the bell. Analysts are looking for earnings of $1.03 per share on revenues of $22.3 billion. When the company last reported on July 14, earnings of $1.03 beat estimates by two cents on a 0.2% rise in revenue.
Anthony Mirhaydari is the 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.
