Some of the country's biggest banks saw their share prices surge after their Quarter 1 earnings beat analysts' expectations.
Shares of JPMorgan Chase rose 4.1 percent after it reported a 5 percent boost in profits, beating expectations and showcasing the strength of its banking operations.
Morgan Stanley (+4.4 percent), Bank of America (+3.3 percent), Goldman Sachs (+2.3 percent) and Citigroup (+2.4 percent) also saw increases in share prices.
In fact, even regional banks such as PNC Financial (+3.3 percent), Comerica (+2.7 percent), KeyCorp (+2.4 percent), Huntington Bancshares (+2.3 percent), Regions Financial (+2.3 percent) and Fifth Third Bancorp (+2.2 percent) saw their shares rise.
“It was a better-than-expected quarter for the banks, which was encouraging to see,” said Carter Henderson, portfolio specialist and director of institutional development at Fort Pitt Capital Group, according to the Wall Street Journal. “But I think that’s as good as it’s going to get for these big banks this year because in the first quarter they were still getting that tailwind from the last Fed hike in December.”
As a result of the strong performance of financial stocks, the Dow Jones Industrial Average rose 227 points (0.9 percent), to 26,370, while the S&P 500 increased 0.5 percent and the Nasdaq Composite rose 0.6 percent. The S&P 500 is up 0.4 percent for the week, and the broad index and the Dow industrials are both within 2 percent of their records.
However, despite reporting that its first-quarter profit rose, Wells Fargo's revenue continued to decline across all of its businesses — leading its shares to fall 3.1 percent.
The bank's CFO, John Shrewsberry, told analysts that Wells Fargo predicts net interest income will fall 2 percent to 5 percent this year, citing factors such as “lower absolute rate outlook, a flatter curve, tightening loan spreads resulting from a competitive market with ample liquidity, and continued upward pressure on deposit pricing.”
“We have more work ahead of us,” Wells Fargo Interim CEO C. Allen Parker said in a statement, according to CNBC. The company’s efforts “are focused on creating a first-rate organization that is characterized by a strong financial foundation, a leading presence in our chosen markets, focused growth within a responsible risk management framework, operational excellence, and highly engaged team members.”