To The Moon

$JPMorgan Chase(JPM)$ is expected to release its third quarter result for 2024 on 11 Oct 2024 before the market open.

JPMorgan is expected to report $4.0 per share in earnings (down -6.7% year-over-year) on $41.01 billion in revenues (up +2.9% YoY).

The stock was modestly down on the last earnings release on 12 July but was down in response to each of the preceding two quarterly releases in April and January 2024.

NII Projections For 2025 Too High Might Bring Stock Price Down Despite Positive Earnings

In early September 2024, JPM stock plunged almost 7% Tuesday afternoon, its biggest dip in more than four years, after the bank’s president warned that its current net interest income projections for next year are too high.

The factors that investors might be focusing is loan growth for many banks remains sluggish due to high interest rates, which could continue to weigh on net interest income (NII) in the near term.

NII growth potential is close to turning, though this largely depends on the timing and magnitude of the Fed's rate-cutting cycle. September rate cut of 50 basis points have been announced, and there might be some more rate cut before end of 2024.

So if we were to look at JPM performance, I believe this coming quarter earnings should be positive as the interest rate remain elevated, but the outlook for 2025 would need to take a beating on the NII.

That might not sit well with investors on the stock price after earning release.

Why JPM Earnings To Be Watch? S&P 500 Financial Sector Performance

If we looked the S&P 500 Financials sector performance over the past 1 year, it has a 39.99% gain, and JPM is the second largest holdings in term of holdings.

This earnings would be important to kick start the financials banking earning season as this could set a trend on how rate cut in September and few more before end of 2024 would impact banks earnings in 2025.

I foresee that JPM might give a less than positive NII guidance after the earning result. this is because rate cut will impact their earnings, as JPM has significantly benefit from the previous rate hike.

S&P 500 Financial Perform Better Than S&P 500 Index

If we looked at how the S&P 500 Financials sector have performed over one year against the S&P 500 index, we can see that it is much better by almost 5%.

So the financial sector have been doing well before the rate cut decision was made in September and we have not seen any impact on the stocks in the financials sector yet.

Hence, JPM earnings and the rest of financial institution earnings would be in focus.

Technical Analysis - MACD and KDJ

If we looked at how JPM would move in terms of stock price on 1 month chart, after the earnings, there will be a downside movement as seen on the KDJ and MACD is also making a downtrend movement, so we could maybe monitor and take advantage of the lower stock price before we see the full impact of rate cut on JPM earnings.

I would think that the impact would be felt more on the fourth quarter earnings.

Summary

I think JP Morgan might suffer some reduction in its revenue and earnings following the rate cut, the impact might be felt more in the Q4 2024 earnings, but the outlook guidance might also bring some volatility to its stock price.

Appreciate if you could share your thoughts in the comment section whether you think JPM could still maintain a high NII despite interest rate cut?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.