Shares of Big US Banks Rally on Strong Payout Plans

Shares of Big US Banks Rally on Strong Payout Plans

Shares of Big US Banks Rally on Strong Payout Plans, Tech Falling

$DIA, $SPY, $QQQ, $VXX, $JPM, $KEY

Thursday, shares in the biggest US banks rose after they revealed buyback and dividend plans that topped analyst expectations after the Fed approved capital proposals in its annual stress test program.

The S&P 500 Bank sector index rose as much as 3% to its highest point since 17 March and was last up 1.3%. Regions Financial was the biggest percentage gainer of the 34 banks involved in the stress tests with a 3% rise.

A total shareholder payout estimate of $132-B compared with expectations for $120-B from analysts

Overall, there were high expectations and they came in above that.

JPMorgan Chase & Co’s (NYSE:JPM) buyback alone is around the same amount as the gross domestic product of Iceland or the entire market value of KeyCorp (NYSE:KEY)

The stress test showed that many of the banks involved have not only built up adequate capital buffers but also improved risk management, the Fed said late Wednesday.

The approval was a victory for the industry, which has worked to regain its stature since the Y’s 2007-2009 financial crisis, and marked the 1st time since the crisis that banks could pay out as much as they report in annual profits.

Thursday, with the S&P 500 and DJIA posting their worst daily decliner in about 6 weeks, as a recent decline in technology shares deepened and outweighed strength in bank shares.

The DJIA fell 167.58 points, or 0.78%, to 21,287.03, the S&P 500 lost 20.99 points, or 0.86%, to 2,419.7 and the NAS Comp dropped 90.06 points, or 1.44%, to 6,144.35.

For the 1st time since April 13, the NAS Comp ended the day below its 50-Day MA.

The CBOE Volatility Index (VIX) 11.56, +1.53, +15.3%, spiked to its highest mark in over 5 weeks.

Friday, investors will receive several economic reports, including May Personal Income and Personal Spending (consensus 0.3%; 0.1%) at 8:30 ET, June Chicago PMI (consensus 57.8), and the final reading of the University of Michigan Consumer Sentiment Index (MSI) for June ( consensus 94.7) at 10:00 ET.

  • NAS Comp +15.9% YTD
  • S&P 500 +8.7% YTD
  • DJIA+8.3% YTD
  • Russell 2000 +3.5% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.32) Neutral (0.07) Bullish (0.35) Very Bullish (0.54)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Neutral (0.23) Neutral (0.05) Neutral (0.08) Very Bullish (0.54)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Neutral (0.04) Neutral (-0.03) Neutral (-0.15) Bullish (0.31)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Neutral (-0.23) Bearish (-0.29) Neutral (-0.11) Bearish (-0.29)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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