Good morning, this is CNN Business reporting on the latest news in the financial sector. The United States’ biggest banks are gearing up for a pivotal week ahead as they prepare to release their quarterly earnings reports. JPMorgan Chase, Citigroup, and Wells Fargo are set to kick off bank earnings on Friday morning, with Goldman Sachs and Bank of America following suit next week.
According to FactSet, the financials sector is expected to see annual earnings growth of 4.3% during the second quarter. Investors will be closely monitoring these earnings reports for insights into how the American consumer and economy are faring in the current environment of high interest rates and cooling inflation.
Dave Sekera, chief US market strategist at Morningstar, highlighted the importance of watching banks’ delinquency rates. With consumers facing increasing pressure from high interest rates, delinquency rates have been on the rise. The Federal Reserve Bank of New York reported that the share of credit card balances in serious delinquency reached its highest percentage since 2012 in the first quarter.
Recent economic data has shown that consumers are becoming more cautious with their spending habits. Retail sales saw only a slight increase in May, with major retailers like Target, Home Depot, and Best Buy reporting a decrease in spending on discretionary items. On the other hand, discount retailers are seeing increased traffic as consumers search for deals.
Despite last year’s regional banking crisis, the US financial system appears to be in a stable position. All 31 banks evaluated in the Federal Reserve’s annual stress test passed this year, demonstrating their financial resilience under adverse conditions. However, the Fed warned that banks could face higher losses in the event of an economic downturn.
While the stock market has been hitting record highs in recent weeks, some economists are raising concerns about the rising risk of unemployment in the still-strong job market. With inflation cooling, there are calls for the Federal Reserve to ease up on its inflation fight and consider cutting interest rates to prevent a recession.
In other news, Target has announced that it will stop accepting personal checks from customers starting July 15. The retailer cited “extremely low volumes” of checks as the reason for this decision, joining other stores like Aldi and Whole Foods in phasing out this form of payment.
That’s all for now from CNN Business. Stay tuned for more updates on the latest financial news. Thank you for watching.
