Market watchers will be focused on big bank earnings and CPI inflation data on a busy Tuesday.
A few big banks will kick off earnings season when Citigroup (C), JPMorgan (JPM) and Wells Fargo (WFC) deliver quarterly results ahead of the opening bell.
Analysts noted that JPMorgan’s report will offer insight into the global bank’s fourth-quarter trends. JPM’s management previously said that net interest income looked better in mid-December. A strong U.S. consumer and loan growth is expected to have boosted the bank’s business during the most recent quarter. Analysts polled by Bloomberg expect JPM to report fourth-quarter adjusted earnings of $2.36 per share on $27.90 billion in revenue.
FILE PHOTOS: Signs of JP Morgan Chase Bank, Citibank and Wells Fargo & Co. bank are seen in this combination photo from Reuters files. REUTERS/File Photos
Citigroup’s return on tangible equity (ROTE) goal for this year will be in focus when it reports earnings. Wall Street expects Citi’s 2020 target to show strategies focusing on meaningful profitability improvements. Net interest margin, a key metric for banks, is expected to have grown 2.58% during the fourth quarter, up 2 basis points from the third quarter, according to data compiled by Bloomberg. Citi is expected to report adjusted earnings of $1.84 per share on $17.88 billion in revenue.
Actual results from Wells Fargo will likely be overshadowed by the bank’s message to investors on how its new CEO Charlie Scharf is planning to turn around the company. He took the top job on Oct. 21. Wells Fargo’s net interest margin during the fourth quarter is expected to have declined 12 basis points from the previous quarter to 2.54%. Analysts anticipate adjusted earnings of $1.11 per share on $20.08 billion in revenue.
Meanwhile, investors will get a pulse on the state of the U.S. economy when key inflation data is released ahead of the opening bell. The Labor Department will report December’s Consumer Price Index (CPI), and economists polled by Bloomberg are expecting core CPI to have risen 0.2% from November and 2.3% from the same period last year.
“Core CPI should remain solid in the next few months and easy base comparisons should support the YoY reading,” Credit Suisse wrote in a note to clients Jan. 9. “With the December tariffs on consumer goods cancelled and limited wage pressure, we don’t expect a meaningful break higher in core inflation. The FOMC are likely to be more sensitive to downside surprises in the months ahead, given persistent below-target inflation and falling inflation expectations.”
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Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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