Normally both Wells Fargo and JPMorgan round off the first week of the US reporting season, however this quarter JPMorgan has delayed their statement leaving Wells Fargo to carry the weight of market expectations on its own.
The markets are expecting the company to post broadly unchanged sales figures of $20.82 billion and an operating profit of $8.28 billion, with pre-tax profit a touch better than the previous quarter at $8.46 billion.
Banks around the world have had to face numerous headwinds this year as the deadline for Basel III requirements has started to loom large on the horizon. Also complicating the picture has been the mixed messages that numerous central banks have made over their medium-term interest rate outlook.
As can be reflected in the Wells Fargo share price, investors have become disenchanted with companies that are too heavily weighted towards investment business. That being said, the US housing market is still struggling, with falling numbers of refinancing mortgages outpacing increasing new mortgage rates.
Wells Fargo shares continue to enjoy a bullish trend, however the divergence between the share price and the 200-day moving average looks to have become a little too wide. Although Wells Fargo figures might not be too bad, traders are more pessimistic about banking stocks as a whole, and some sort of correction might not be too far off. The 50-day moving average has been very supportive over the last six months, and only a break below this would be likely to trigger a change of heart.