Banks Kick Off Earnings Season: Retail Traders Bet Big on Financials Ahead of Regulatory Tailwinds

As the largest U.S. banks gear up to report their fourth-quarter earnings, retail traders are eagerly anticipating the results, with many betting big on the financial sector. The upcoming earnings season, set to begin on Wednesday, January 15, 2025, is expected to provide valuable insights into the health of the banking sector and may influence investor sentiment for the coming year.

The KBW Bank Index (BKX) returned 11.4% during the fourth quarter of 2024, even as the S&P 500's return slowed to 2.4% for the same period. This strong performance by the bank index can be attributed to an improving interest-rate environment for banks, which is expected to continue into 2025. As a result, investors are anticipating further gains in the banking sector, fostering a positive sentiment heading into the new year.



The earnings season for the largest U.S. banks will begin on Wednesday, January 15, 2025, with reports from JPMorgan Chase & Co. (JPM), Citigroup (C), Wells Fargo & Co. (WFC), and Goldman Sachs Group Inc. (GS). Bank of America Corp. (BAC) and Morgan Stanley (MS) will follow on Thursday. These earnings reports will provide valuable insights into the health of the banking sector and may influence investor sentiment in 2025.

Philip van Doorn, the author of the article, highlights two standout names in the banking industry for 2025: Citigroup Inc. (C) and Charles Schwab Corp. (SCHW). Citigroup is still cheaply priced and may have a significant advantage under the Trump administration, while Charles Schwab is expected to benefit from the growth in its wealth management business.

Investors will be closely watching these earnings reports, as they may provide clues about the direction of the banking sector in 2025. The positive sentiment surrounding the banking sector, coupled with the anticipated regulatory tailwinds, may lead to further gains in the financial sector in the coming year.

In conclusion, the strong performance of the KBW Bank Index in Q4 2024, coupled with the positive outlook for the banking sector in 2025, is likely to foster a positive investor sentiment heading into the new year. The earnings reports from the largest U.S. banks will serve as a key indicator for investors, potentially shaping their expectations and decisions for the coming year. As retail traders bet big on the financial sector, they should keep a close eye on the earnings reports and the broader regulatory environment to make informed investment decisions.