Last week, investors showed confidence in Fed Chair Jerome Powell’s statements about potential interest rate cuts by pouring money into big cap financial institutions such as Bank of America, Citigroup, Deutsche Bank, and J. P. Morgan Chase. This flood of money pushed these well-known names to new highs and the Financial Select Sector SPDR exchange traded fund also reached a new high as a result.
Bank of America, with a market capitalization of $291 billion, offers investors a 2.54% dividend with a price-earnings ratio of 12 and trades at 1.12 times book value. The stock has shown positive movement since the late October 2023 low and the relative strength index is currently in the “overbought” range. Similarly, Citigroup trades at a price-earnings ratio of 15, at a discount to book value, and offers a dividend of 3.45%. The daily price chart shows strong performance from late October to the current price of $60.82, a 39% gain.
Deutsche Bank, based in Germany and New York, has a market capitalization of $29.78 billion, a price-earnings ratio of 6.76, and trades at a discount to book value. The daily price chart shows a 34.6% gain in value over five months. J. P. Morgan Chase, with a market capitalization of $566 billion, offers a dividend of 2.09% with a price-earnings ratio of 12.12 and trades at 1.91 times book value. The stock has shown positive movement since November 2023.
Investors have been drawn to these big financial institutions due to their strong performance and dividend offerings, as well as the positive movement in their stock prices. The daily price charts for each of these companies show upward trends in both the 50-day and 200-day moving averages, as well as “overbought” relative strength indices. While this is positive for investors who hold these shares, any delays in expected rate cuts from the Fed could impact the performance of bank stocks negatively.
For now, investors continue to show confidence in big cap financial institutions and the Financial Select Sector SPDR exchange traded fund. However, the potential for changes in interest rates by the Fed could impact the performance of these stocks in the future. As investors monitor the market and the actions of the Fed, it will be interesting to see how these big NYSE banks continue to perform in the coming months.
