Jan 17, 2020

Banks may struggle to recreate 2019 success

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Reproduced from Bloomberg; Chart: Axios Visuals

Wall Street analysts are betting the banks can't do it three years in a row.

What they're saying: Analysis from Yardeni Research shows the average expectation is for a 0.4% decline in S&P 500 diversified banks’ 2020 revenue and only a 3.8% increase in earnings.

  • Forecasts for the S&P 500 investment banking and brokerage industry are also weak, with calls for revenue to edge up by 1.6% and earnings to rise 4.5% this year.
  • Earnings estimates for both banks and investment banks/brokerages have been revised downward in recent months.

Go deeper: Big American banks are doing quite well in 2019

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Big banks saved billions thanks to the Trump tax cuts

Illustration: Aïda Amer/Axios

The Tax Cut and Jobs Act helped power the biggest U.S. banks to record profits for the second straight year.

Why it matters: The tax cut was sold as a way to revitalize hiring and spending by American companies to boost the economy and help struggling workers, but the windfall is largely staying with banks and their shareholders.

Go deeperArrowJan 17, 2020

Earnings on pace for a strong rebound

Data: FactSet; Chart: Axios Visuals

Thanks to a cadre of better-than-expected earnings results from the companies that have reported their fourth-quarter earnings so far, the earnings growth rate for the S&P 500 has risen to 0.7%.

Why it matters: That is a far cry from the estimated earnings decline of -1.7% at the end of the quarter. If it holds, this would mark the first time the index has reported year-over-year growth in earnings since Q4 2018. 

S&P 500 earnings on pace for 4th straight negative quarter

Traders at the New York Stock Exchange on Jan. 8. Photo: Wang Ying/Xinhua via Getty) (Xinhua/Wang Ying via Getty Images

Strong earnings reports from buzzy tech companies like Amazon and Microsoft have dominated headlines, but the numbers for the broader market remain negative.

What's happening: With 45% of S&P 500 having reported earnings, FactSet estimates an overall earnings decline of 0.3% for the quarter.