Goldman Sachs, JP Morgan Q2 earnings beat estimates, getting the season off to a good start

13 Jul 2021 02:14 PM
Goldman Sachs reported second-quarter earnings before Tuesday's opening US bell, and the bank beat previous estimates, boosted by investment banking revenue from a strong IPO market.

The bank’s earnings per share (EPS) came better than expected at $15.02 during the second quarter, compared to Zacks Investment forecasts which indicated $9.57, while it recorded earnings per share of $6.26 during same period in the previous year.

The bank reported $15.39 billion in revenues, compared with the $12.17 billion average estimate. The investment banking recorded its second highest quarterly net revenues ever, at $3.61 billion, just behind the first quarter of 2021, as a booming market boosted Goldman Sachs IPOs.

Among the six largest US banks, Goldman Sachs gets the largest share of its revenue from Wall Street activities, including commercial and investment banking. The bank's shares rose 45% in 2021 on the back of the economic recovery from the Coronavirus pandemic.

Technically, the stock is trading at 380, above the 50 and 100 simple moving averages (SMA). The share is also trading above the ascending trend line on the 4-hour time frame. Bulls will be hopeful for the prices to remain above the moving averages and the trendline in order to see a further continuation to the current bullish bias towards the $390-400 levels.
However, if prices started trading below the support area of $348-344, this may indicate a reversal to the downside where bears could target the levels of $330 and then $316.

JPMorgan also reported second-quarter earnings and revenue that exceeded analysts’ expectations as the banking giant released money set aside for loan losses. Earnings were at $3.78 per share, exceeding the $3.10 per share forecasted by Zacks Investment. The bank's revenues during the second quarter amounted at about $31.4 billion, better than expectations.

One key factor is that after the industry set aside tens of billions of dollars for loan losses last year, banks have been releasing reserves as borrowers have held up better than expected.

It happened in the second quarter at JPMorgan, the biggest US bank by assets. The firm recorded $2.3 billion boost from releasing $3 billion in loan loss reserves after taking $734 million in deductions. The bank had a reserve issuance of $5.2 billion in the first quarter of 2021.

JPMorgan's shares have climbed 24% this year, outpacing the S&P 500's 17% rally.

Technically, the stock is currently trading slightly below the resistance level at 159.12, and very close to re-test an important support area around the 157 levels. If the share price remained above that area, this could push the price to rise again towards 159 levels and then towards the 161 164 dollars

Trading below the support at $157 will be required to prove that the trend has turned to the downside, and the price will then target the levels of 153 and $150.


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