Charles Schwab Corporation Common Stock SCHW shares are trading higher by 1.48% to $67.64 during Friday’s session amid strength in the U.S. financial sector following a series of strong third-quarter earnings reports from major institutions, including JPMorgan Chase, Wells Fargo and BlackRock.
These financial heavyweights surpassed earnings expectations, which lifted the entire sector and sparked a rally in peer financial firms like Charles Schwab.
What’s Going On: The Financial Select Sector SPDR Fund (XLF) jumped nearly 2%, hitting record highs and setting the stage for a broad-based rally across financial stocks. This momentum has had a direct impact on Schwab, with investors betting that the brokerage giant will deliver strong earnings, driven by rising interest income and solid client activity.
As a leading brokerage and wealth management firm, Charles Schwab has benefited from an ongoing shift toward self-directed investing and increasing demand for financial advice.
In recent quarters, Schwab has also capitalized on the higher interest rate environment, which has boosted net interest margin—an area that has been a strong focus for the financial industry this earnings season.
JPMorgan Chase, for example, beat estimates with $23.53 billion in net interest income (NII), signaling strength in this critical area of revenue generation.
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What Else: With interest rates remaining elevated, Schwab's NII is expected to be a key driver of its upcoming earnings. Like JPMorgan and Wells Fargo, Schwab is poised to see continued benefit from the higher rate environment as it earns interest on client cash balances held in sweep accounts.
This could offset any potential weakness in other areas, such as asset management fees, which may be pressured by market volatility.
Charles Schwab's business model is well-diversified, spanning brokerage, banking, and wealth management services, allowing it to capture growth across different segments. The bank's focus on low-cost trading, investment advisory services, and a broad range of financial products gives it a competitive advantage in attracting retail and institutional clients.
In addition, Schwab's vast network of individual retirement accounts (IRAs) and retail brokerage accounts positions it well to benefit from the long-term shift toward self-directed retirement savings.
How To Buy SCHW Stock
Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.
For example, in Charles Schwab’s case, it is in the Financials sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.
According to data from Benzinga Pro, SCHW has a 52-week high of $79.49 and a 52-week low of $48.66.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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