Bank stocks came under heavy selling pressure earlier this year as the coronavirus pandemic upended economic activity, causing banks to significantly beef up their bad debt provisions. However, the group has almost doubled the broader market’s performance over the last month as investors bet that a vaccinated population and ongoing levels of record stimulus spending will spark a strong recovery in 2021.
Below, we look at three large-cap banking stocks that each trade above their 200-day simple moving average (SMA).
JPMorgan Chase & Co.
With a market value upwards of $370 billion and issuing a 3.01% dividend yield, New York-based JPMorgan Chase & Co. (JPM) operates as a financial services company through four segments: consumer & community banking, corporate & investment bank, commercial banking, and asset & wealth management.
The financial giant eased concerns of ongoing loan defaults during its latest quarterly earnings release, disclosing that it had reduced provision for credit costs by $569 million.The bank had added more than $15 billion to loan loss reserves in the first half of 2020. Technical analysis shows price continuing higher after the 50-day SMA crossed above the 200-day SMA, marking the start of a new uptrend. Further bullish momentum may see the stock retest its 52-week high at $141.10.
Citigroup Inc. (C) provides diversified financial services and products in over 100 countries to consumers, corporations, governments, and institutions. Like its competitors, the bank slashed its loan loss provisions in the third quarter, with net credit losses declining to $1.9 billion from $2.2 billion in the previous three-month period. Moreover, the bank’s CEO Michael Corbat told investors that credit costs have stabilized and deposits continue to increase, per CNBC.
The stock has a market capitalization of $119 billion and offers a 3.68% dividend yield. From a technical standpoint, the price trades above both a multi-month downtrend line and the 200-day SMA, which may see the bulls test the top of a previous trading range at $73.
Wells Fargo & Company
Wells Fargo & Company (WFC) serves its customers through three business divisions: community banking, wholesale banking, and wealth- and investment management. Although the 168-year-old bank reported a 19% year-over-year (YoY) decline in Q3 net interest income, it set aside just $769 million for credit losses – down substantially from the $9.5 billion put aside in the second quarter.
The company has a market value of $119.36 billion and pays investors a 1.43% dividend yield. Chart wise, since hitting its 2020 low in late October, the price has gained nearly 40% to now trade back above the 200-day SMA. Ongoing buying could see the stock test major resistance levels at $34 and $43.
For a look at today’s earnings schedule, check out our earnings calendar.