In a salute to belief in the statements of Fed Chair Jerome Powel about the eventual appearance of interest rates cuts (later to late this year?), investors last week poured into the really big, big cap financial institutions. The flood of money was great enough to take several well-known names up to new highs.
Well-known would include, for example, Bank of America
BAC
, Citigroup, Deutsche Bank and J. P. Morgan Chase — the money giants of the Western world, basically. Since each of these is a component of the Financial Select Sector SPDR exchange traded fund, that ETF climbed to a new high as well.
4 Big NYSE Banks Hitting New Highs.
Bank of America, with a market capitalization of $291 billion, is paying investors a 2.54% dividend. The price-earnings ratio is 12 and the stock trades at 1.12 times book value with the amount of debt at 2 times shareholder equity.
The daily price chart (below) shows the nice surge off of the late October 2023 low near $24.50. The 50-day moving average made the cross above the 200-day moving average in mid-December. The relative strength index is now in its “overbought” range but it’s been there before and that hasn’t stopped the rally.
Citigroup trades with a price-earnings ratio of 15 and at a 38% discount to book. The market cap is $116 billion. The debt-to-equity ratio is 2.89. The bank pays a dividend of 3.45%.
It’s clear from the daily price chart, shown below, that investors basically can’t get enough of Citigroup — at least, from the late October low of $37 up to the current price of $60.82. That’s a 39% gain from the bottom to last week’s high. The RSI on this one has also reached “overbought” status.
Deutsche Bank is based in Frankfurt, Germany with U. S. headquarters in New York, New York. Its market capitalization is $29.78 billion. The stock’s price-earnings ratio is a mere 6.76 and it trades at 57% discount to its book value. The company pays a 2.11% dividend.
The daily price chart (below) shows that the 50-day/200-day moving average crossover came in mid-November 2023 and proved to be a decent signal for further advances. From $10 at the late October 2023 low to the current $15.30 is a 34.6% gain in value over 5 months time.
J. P. Morgan Chase has a market capitalization of $566 billion, has a price-earnings ratio of 12.12 and trades at 1.91 times book. Debt is 1.17 times shareholder equity. The short float is a remarkably low .66%. This big NYC-based financial institution pays a dividend of 2.09%.
The daily price chart for J. P. Morgan Chase is below. Note that both the 50-day and 200-day moving averages have been trending upwards since November 2023 — and that the price has remained well above the 50-day for all of that period. The relative strength index has reached “overbought.”
The Financial Select Sector SPDR daily price chart looks like this:
Although it’s wonderful for those investors who’ve purchased and held on to these shares, what a shame it would be if the Fed kept putting off rate cuts — or even, as hard as it may be to fathom for some, began to raise them. That would be unfortunate indeed for purchasers of bank stocks.
