Sunny Skies for the Banks
JPMorgan (JPM – Free Report), Wells Fargo (WFC – Free Report), Citigroup (C – Free Report), and Goldman Sachs (GS – Free Report) were surprised to the upside in their respective Q4 results. Importantly, they either explicitly guided higher for 2025 or provided a generally reassuring view of business conditions in the coming quarters.The operating environment is expected to get friendlier for the banks in the coming months and quarters, with the yield curve starting to steepen after a long period of inversion and the Trump Administration expected to ease regulatory restrictions. You can see this favorable sentiment in the chart below that plots the stock market performance of JPMorgan, Goldman Sachs, the Zacks Banking industry, and the S&P 500 index since November 7th. 
Image Source: Zacks Investment ResearchWhile the operating environment for the core banking business has started to improve, banks are still faced with depressed margins and anemic loan demand. Loan portfolios at JPMorgan and Wells Fargo were only modestly up from the year-earlier level, with the gains coming in the investment banking and capital markets businesses. All of these companies reported investment banking revenue gains in excess of +20%, with strong trading volumes resulting in impressive trading revenue growth.For JPMorgan, Q4 earnings were up +15.7% from the year-earlier level, with the same for Wells Fargo, Citigroup, and Goldman increasing by +0.5%, +44.2%, and +104.7%, respectively. These better-than-expected results from the banks have helped bump the aggregate earnings growth pace for the S&P 500 index, which is now expected to increase by +8% in Q4.
Tech to Remain a Key Growth Driver
The Tech sector has been a significant growth driver in recent quarters, and the trend is expected to continue in 2024 Q4 and beyond. For Q4, Tech sector earnings are expected to be up +14.7% from the same period last year on +10.1% higher revenues, the 6th quarter in a row of double-digit earnings growth.This would follow the sector’s +22.6% earnings growth on +11% higher revenues in 2024 Q3. As the chart below shows, the sector’s growth trajectory is expected to continue in the coming quarters.
Image Source: Zacks Investment ResearchIn addition to the Tech sector’s strong growth profile, the sector is also among the few sectors whose earnings outlook is steadily improving. This shows up in the revisions trend for the Tech sector for both Q4 and full year 2025.
The Earnings Big Picture
The chart below shows expectations for 2024 Q4 in terms of what was achieved in the preceding four periods and what is currently expected for the next four quarters.
Image Source: Zacks Investment ResearchThe chart below shows the overall earnings picture on an annual basis.
Image Source: Zacks Investment ResearchAs you can see, the expectation is for double-digit earnings growth in each of the next two years, with the number of sectors enjoying strong growth notably expanding from the narrow base we have been seeing lately.In fact, 2025 is expected to have all 16 Zacks sectors enjoy earnings growth, with 10 of the 16 Zacks sectors expected to produce double-digit earnings growth. Unlike the last two years, when the Mag 7 group drove all or most of the aggregate earnings growth, we will have double-digit S&P 500 earnings growth in 2025, even without the contribution from this mega-cap group.More By This Author:Top Stock Reports For Tesla, Bank Of America & Alibaba
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Broad-Based Growth Expected In 2025
