Markets were in the red today after three major banks announced their quarterly results before the bell on Friday.
JPMorgan Chase & Co. reported significant improvements in both sales and bottom line, with first-quarter profits up 6% to $13.4 billion. Despite the favorable conditions, JPM Chairman and CEO Jamie Dimon emphasized concerns about the future, saying, “Looking to the future, we remain vigilant to a number of significant uncertainties.” “There appears to be a lot of persistent inflationary pressure, and that’s likely to continue.” ”
Wells Fargo and Citibank both reported declines, but not as sharply as Wall Street had expected. Bank ETFs fell due to the lackluster news coverage. XLF, Financial Select Sector SPDR Funddown 1%.
The banking sector continues to perform well as higher interest rates have increased the profitability of the financial sector. Since the beginning of the year, XLF is up nearly 11%. However, today’s report highlights that rising interest rates could be a headwind going forward.
XLF Year-to-date performance
Source: etf.com data
BlackRock also reported quarterly results before the bell Friday, beating expectations for both profit and revenue. BlackRock’s assets under management (AUM) soared to a record $10.5 trillion, and revenue increased 11% thanks to higher fees and strong market performance.
BlackRock ETF continues to perform well, but BlackRock’s largest ETF, IVV, iShares Core S&P500ETFhas risen more than 9.5% since the beginning of the year as the market continues its bullish run.
Rising interest rates typically boost the financial sector, but a “prolonged high interest rate” environment poses challenges. Rising interest rates have driven consumers elsewhere to seek higher yields on savings accounts offered by small and medium-sized banks, while many people seeking financing for financial products such as mortgages have declined. , are choosing to sit on the sidelines and wait for interest rates to recover.
Inflation concerns have been at the forefront this working week after Wednesday’s Consumer Price Index (CPI) highlighted a persistent and stubborn inflation trend.
Investors now don’t expect the Fed to cut rates until its July policy meeting at the earliest, which will continue to weigh on real estate and bond ETFs.
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