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Judging by the first three big US banks to report, the banking sector is in good shape. JP Morgan, Wells Fargo and now Citigroup have delivered exceptional levels of earnings growth for the second quarter and if this sets the trend, we can expect good things from Goldman Sachs tomorrow and Bank of America on Wednesday.
Citigroup reported today earnings of $1.25 per share for the quarter, up from $1.00 per share for the same period last year. A Thomson Reuters survey of analysts had expected $1.17 per share. Macro-economic data was less clearly positive, with strong manufacturing data for the New York state area being offset by retails sales that undershot expectations.
The main US stock indices had made modest gains by early afternoon in New York, with the Dow Jones up 0.12% at 15,483, after closing at its highest price ever at the end of last week. The broader S&P 500, was up just 0.09% at 1681.6, despite Citigroup being a component of the S&P 500 and not the Dow Jones.
The earnings season is fully underway now, and the list of leading US companies that we will be hearing from this week alone is long. It includes American Express, Coca-Cola, Ebay, Google, IBM, Intel, Johnson & Johnson, Microsoft, Verizon and Yahoo, among others. With the early runners having performed well so far, there is a sense of expectancy building, which is in contrast to the way that analysts’ estimates had been dropping in the approach to the start of the earnings season.