2024 saw the financial sector hinting at a much-deserved outperformance based on the robust earnings reports of some of the world’s top names.
For instance, institutions like PNC Financial Services and Goldman Sachs (GS) have released better-than-expected earnings reports for Q4, 2023.
For GS, the net revenue has shot up to $11.32 billion, with the net earnings figure steady at $2.01 for Q4.
Trading.biz analyst Rahul Nambiampurath attributes the strong year-end numbers of GS and other financial institutions to the existing higher interest rate environment. Rahul mentions that the outperformance of the stocks related to the financial space, followed by a surge in the 10-year bond yield figures, might be enough validation to throw the dovish rate cut-stance out of the window for 2024.
Which stocks should we focus on per the current market scenario?
Focusing on GS reveals a solid one-year growth of 8.07%, led mostly by the diluted Earnings-Per-Share figure of $5.48. This number is pivotal as it readily surpassed the Zacks Consensus Estimate number of $3.47. Therefore, folks interested in trading the S&P 500 Index or the Dow Jones Industrial Average (DIJA) can focus on GS.
Looking closely at the GS’ daily chart presents a bullish outlook. GS is currently trading at $377.18, closer to the lower trendline of the bullish ascending triangle pattern.
Even though the RSI signals a weakening momentum, a breach above the upper trendline can push GS towards $389.38 and then $414.22. However, the lower lows made by the RSI might result in a quick, short-term correction. The critical support level would be at $349.
JPM or JPMorgan Chase & Co. and Wells Fargo & Co. have outperformed better, experiencing a one-year surge of 28.92% and 20.09%, respectively. Or, you can focus on indices like the IXF or the Nasdaq Financial 100, which alone has registered a growth of almost 7% over the past six months, as of January 2024.
Here are the top IXF components with their 6-month price percentages:
- Ameris Bancorp (ABCB)- Up by 25.66%;
- Arch Capital Group Ltd. (ACGL)-Down by 2.68%;
- AGNC Investment Corp. (AGNC)- Down by 5.46%;
And more.
What is making the financial sector kick?
The slew of outperformance and price action robustness, especially across bank stocks like Citigroup Inc. ©, which is up 17.37, year-on-year, is closely related to interior rates. Higher interest rate narratives dominated 2023, generating higher income via lending.
The financial sector might be the investors’ favorite with the rate trends, biased towards growth, expected to hold in 2024. However, keeping a close eye on the financial figures associated with the companies invested in is still crucial.
Leave a Comment