Big Banks Could Propel Stocks Higher Amid Q4 Earnings Optimism

The largest U.S. banks are gearing up to release their fourth-quarter earnings this week, with analysts forecasting strong results that could push bank stocks higher in 2025. JPMorgan Chase, Citigroup, Wells Fargo, and Goldman Sachs are set to report on Wednesday, followed by Bank of America and Morgan Stanley on Thursday.

Earnings and Stock Performance Highlights
The banking sector rebounded strongly in 2024, with stocks benefiting from the Federal Reserve’s rate cuts and a surge in capital markets activity. Last year, Goldman Sachs led with a 48.4% gain, followed by Wells Fargo (+42.7%), JPMorgan Chase (+40.9%), and Citigroup (+36.8%).

Analysts remain bullish on bank earnings for Q4:

- JPMorgan Chase is expected to post earnings of $4.09 per share, up from $3.71 in the same quarter last year, driven by strong corporate sentiment and fading recession fears.
Citigroup is forecasted to swing to a profit of $1.22 per share, compared to a loss of $1.16 per share a year ago, as restructuring efforts bear fruit.
Goldman Sachs is projected to report earnings of $8.21 per share, reflecting increased deal-making and wealth management activity.

Optimism Around Regulatory Changes
Recent regulatory shifts are also buoying investor sentiment. The Federal Reserve has proposed more transparency in stress tests, while Michael Barr’s resignation as vice chair of supervision has raised hopes of reduced capital requirements. This could free up more capital for buybacks and dividends.

“The prospect of deregulation has allowed larger banks to hold onto more of their recent gains,” said KBW analyst David Konrad, who predicts further upside for global systemically important banks (G-SIBs).

As the largest U.S. bank, JPMorgan Chase is likely to set the tone for the sector with its Q4 results. Analysts will focus on deal pipelines, loan growth, and potential revenue tailwinds from higher interest rates.

Bank of America and Citigroup have also been singled out as top picks by analysts, with UBS projecting a 20% gain in Bank of America’s stock this year. Meanwhile, Wells Fargo CEO Charles Scharf noted “continued strength across both consumer and business banking” despite challenges for lower-income consumers.

If earnings exceed expectations, bank stocks could maintain their upward momentum, solidifying their position as key drivers of the 2025 stock market rally.