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Bank Stocks Slide Despite Strong Earnings, Trump Boost

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Despite a relatively strong fourth-quarter earnings season, the banking sector is taking a beating on Tuesday. Some of the world’s largest banks, including JPMorgan Chase (JPM - Free Report) , Wells Fargo (WFC - Free Report) , Bank of America (BAC - Free Report) , and Goldman Sachs (GS - Free Report) are sliding as investors appear to have lost interest in the thriving industry.

Banking stocks have been on an impressive run since the election, as President-elect Trump has repeatedly promised to deregulate Wall Street. Also, the Federal Reserve recently detailed its plan for interest rate hikes to increase in frequency over the next year, which should be another move that gives banks a boost.

We have also witnessed the strength of the banking business exemplify itself in strong earnings results. JPMorgan, which has soared over 25% in the past three months, announced its earnings on Tuesday and posted beats on both the top and bottom line.

JPMorgan reported earnings of $1.71 per share on revenues of $23.376 billion, which beat the Zacks Consensus Estimates of $1.42 per share and $23.244 billion, respectively. Nevertheless, shares of JPM slid more than 3.6% on Tuesday.

Morgan Stanley (MS - Free Report) also posted fourth-quarter earnings on Tuesday, with EPS coming in at 81 cents, which handily surpassed the Zacks Consensus Estimate of 65 cents. Net revenue grew 17% to $9.0 billion and also beat the Zacks Consensus Estimate of $8.5 billion. Even still, shares of MS slid nearly 4.3% Tuesday.

Also posting earnings beats this quarter were Wells Fargo, Bank of America, and PNC Financial Services (PNC - Free Report) . While there were some weaknesses of the revenue front, all of those companies posted year-over-year earnings improvements but saw their stock slip on Tuesday.

Looking ahead, Citigroup (C - Free Report) and Morgan Stanley are expected to report its earnings on Wednesday. Citigroup currently has a Zacks Rank #2 (Buy), while Morgan Stanley has a Zacks Rank #1 (Strong Buy). Consensus estimates point to strong year-over-year EPS growth for both companies.

While both companies look to be set to release strong reports, there is no telling what investors will think after today’s activity. Overall, the SPDR Bank ETF (KBE) is down 3.4% on the day, and it may be a sign of new volatility in the industry.

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