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Financials Head Higher After Banks Pass Stress Tests

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Indices look to open flat after yesterday’s slow-moving session brought both the S&P and Nasdaq to all-time highs. Volumes have been fairly low and that should continue all week as traders sit on their hands ahead of Fridays big job number.

Until then, the “Meme Stocks” continue to make the headlines, but we did get a piece of news from the financials that have the banks bid higher premarket.

The Fed stress test results out last week showed that all 23 banks involved in the test passed easily. Starting last night, banks were allowed to announce how they would reward their shareholders.

Dividend increases were the most popular move, with increases from Morgan Stanley, Bank of America, JPMorgan Chase, Wells Fargo, Goldman Sachs and more.

Buybacks were also announced from Morgan Stanley, Wells Fargo, and JPMorgan Chase. While Citigroup plans on continuing their share repurchases, they elected not to raise their dividend.

The financial ETF XLF is trading higher by 0.20% in the pre-market. However, Morgan Stanley is higher by 3.3% and Goldman added over 1.3%. Earnings for the group will come in the second full week of July.

S&P Futures Trading Levels

The S&P futures currently sits at 4278, about 6 handles off overnight highs.    

Support levels for the day will be 4267 and 4254.

Upside resistance is 4187 and 4193.

The current S&P trading environment is grinding higher, with tight ranges and low volumes.

Three Stocks to Watch

MS- Morgan Stanley was the biggest winner and the stock is up over 3.3% on the news from last night. The company raised their dividend by 100%, bringing the yield to around 3.1%. They will also be buying shares, authorizing a $12 billion buyback, which equates to about 7% of the market cap.

The stock looks to take out the highs it set back in early June at $94.51.  

GS- Goldman bid higher pre-market up over $5 or 1.4%. The stock now hovers only $20 under recent highs after the actions taken last night.


Goldman will boost its dividend 60%, from $2 a share to $1.25 a share. This would give investors a yield around 2.15%, which is up from 1.4%.

GBTC– Bitcoin continues to bounce higher and broke the 200-day moving average in the futures contract. Now trading above $35k, Bitcoin looks to have put in a bottom, which is bringing the bulls back into Grayscale’s Bitcoin Trust.

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