Financial Sector ETF Recoups All Of Its Post-Silicon Valley Bank Crash Losses As Major US Banks Report Booming Earnings

The Financial Select Sector SPDR Fund XLF, an exchange-traded fund that provides exposure to a wide range of financial companies in the U.S., on Friday reached its highest level since March 7, 2023.

This represented a complete recovery from the selloff caused by the collapse of Silicon Valley Bank (SIVB), which had led to a significant decline in banking stocks.

Major U.S. banks such as JPMorgan Chase & Co. JPM, Wells Fargo & Co WFC, BlackRock Inc. BLK, Citigroup Inc. C, and State Street Cor. STT announced earnings for the last quarter that exceeded expectations. However, both BlackRock and State Street reported lower-than-expected revenues.

While the ETF tracking large financial corporations has already recovered its pre-SIVB levels, regional bank stocks, as tracked by the SPDR S&P Regional Banking ETF KRE are still about 25% lower than they were prior to the bank turmoil in March.

Chart: US Financial Stocks Recover All Losses After SIVB Collapse

How Have U.S. Major Banks Reported Last Quarter?

• JPMorgan Chase outperformed expectations in the second quarter with outstanding results. The bank posted earnings per share (EPS) of $4.75, well above the expected $4.00 and materially up from the same quarter last year.
  
  Revenue increased by 34% to $42.4 billion, exceeding the Street’s forecast of $38.84 billion. This outstanding performance was aided by a 44% increase in net interest income to $21.9 billion.
  
  JP Morgan Chase & Co. shares were 2% higher at the open on Friday.
  
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• Wells Fargo reported EPS of $1.25 in the second quarter, surpassing the average analyst estimate of $1.14. This represents an increase from $1.23 in the first quarter and $0.75 in the same quarter last year.
  
  Total revenue was $20.5 billion, slightly more than the expectation of $20.1 billion. While it was down from $20.7 billion in the first quarter of 2023, it was up from $17.0 billion in the second quarter of 2022.
  
  At the opening bell, Wells Fargo stock was up 2.8%.
  
  
• BlackRock reported quarterly earnings of $9.28 per share, above the $8.43 per share consensus expectation. This represents an increase from earnings per share of $7.36 in the prior year and $7.93 in the preceding quarter.
  
  Revenues were somewhat lower than expected, at $4.46 billion vs $4.47 billion. But, they were only modestly lower than in the previous year’s same period and more than the $4.24 billion recorded in the first quarter.
  
  BlackRock stock fell 2% at the open.
  
  
• Citigroup announced EPS of $1.33 in the second quarter, exceeding the projected $1.31 and improving by 1.9% from a year earlier. But earnings fell significantly from $2.19 in the first quarter.
  
  Revenues totaled $19.44 billion, exceeding the consensus figure of $19.34 billion and representing a 0.5% rise over the previous year. Despite this, they are down from $21.45 billion in the first quarter.
  
  Citigroup was flat at the open.
  
  
• State Street reported EPS of $2.17, exceeding the $2.10 expected. This result marked a substantial rise from $1.5 in the previous quarter and $1.94 in the previous year’s same quarter. But revenue fell short of forecasts, totaling $3.11 billion, compared to the expected $3.14 billion.
  
  Revenues grew from $2.95 billion the previous year but fell slightly from $3.10 billion the prior quarter.
  
  State Street declined 4.3% in the first minutes of trading.
  
  
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