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How Will Bank ETFs Perform in Light of Q1 Earnings?
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Key Takeaways
Big banks mostly show positive ESP; paired with better Zacks Ranks, it boosts odds of earnings beats.
Strong net interest income & deal activity may support bank stocks and ETFs.
XLF, VFH, IYG, IYF & KBWB could gain if the yield curve steepens.
Big banks will start releasing their quarterly numbers from next week. Let’s delve into the earnings potential of the big six banking companies, which could drive the performance of the sector ahead.
According to our methodology, a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) when combined with a positive Earnings ESP, increases the chances of predicting an earnings beat, while companies with a Zacks Rank #4 or 5 (Sell rated) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Inside Our Surprise Prediction
Among the big six, JPMorgan Chase & Co. (JPM - Free Report) , Wells Fargo & Company (WFC - Free Report) , and Citigroup Inc. (C - Free Report) are expected to report earnings on April 14. Bank of America Corporation (BAC - Free Report) and Morgan Stanley (MS - Free Report) are likely to report on April 15. The Goldman Sachs Group (GS - Free Report) is expected to come up with earnings results on April 13.
GS has a Zacks Rank #3 and an ESP of +1.48%.
JPM has a Zacks Rank #3 and an Earnings ESP of +0.52%.
C has a Zacks Rank #3 and an ESP of +0.25%.
WFC has a Zacks Rank #3 and an ESP of negative 0.14%.
BAC has a Zacks Rank #3 and an Earnings ESP of +1.00%.
MS has a Zacks Rank #3 and an Earnings ESP of 0.00%.
Are Positive ESPs Good for Financial ETFs?
As discussed above, chances of a broad-based earnings beat are moderate-to-high as most stocks are experiencing a positive ESP. We do not expect bearish earnings results from big banks, as capital market activities should be upbeat.
Interest income and investment banking revenues should be strong, per Reuters. However, rising geopolitical risks due to the Iran war add to uncertainty. Deal-making has been solid thanks to large mergers and acquisitions.
About two dozen mega deals worth over $10 billion were reached globally, along with 40 deals valued at over $5 billion, according to LSEG data, per the same Reuters article.
Can Chances of Upbeat Earnings Boost Ailing Financial ETFs?
State Street Financial Sel Sec SPDR ETF (XLF - Free Report) has lost about 6.8% so far this year (as of April 8, 2026). Vanguard Financials Index Fund ETF (VFH - Free Report) also fell about 6.3%. Over the war-laden past month, XLF and VFH have added 1.7% and 2.2%, respectively. Over the past week, both funds have advanced about 2.8% and 3.1%, respectively.
Chances of a steeper yield curve post the Fed comments on a controlled inflationary scenario in the United States have probably favored the financial funds in recent weeks. A steeper yield curve favors banks’ net interest margins. Against this backdrop, the probability of upbeat earnings should be beneficial for the related ETFs.
Bottom Line
So, whatever the earnings surprise is, investors can play these financial ETFs on the basis of yield curve movement. Hence, investors pinning hopes on a bank rally should track financial ETFs like iShares U.S. Financial Services ETF (IYG - Free Report) , iShares US Financials ETF (IYF - Free Report) , Invesco KBW Bank ETF (KBWB - Free Report) , XLF and VFH. These funds have considerable exposure to the aforementioned stocks.
Goldman has moderate exposure in the aforementioned ETFs. It is heavy on iShares U.S. Broker-Dealers & Securities Exchanges ETFIAI.
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How Will Bank ETFs Perform in Light of Q1 Earnings?
Key Takeaways
Big banks will start releasing their quarterly numbers from next week. Let’s delve into the earnings potential of the big six banking companies, which could drive the performance of the sector ahead.
According to our methodology, a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) when combined with a positive Earnings ESP, increases the chances of predicting an earnings beat, while companies with a Zacks Rank #4 or 5 (Sell rated) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Inside Our Surprise Prediction
Among the big six, JPMorgan Chase & Co. (JPM - Free Report) , Wells Fargo & Company (WFC - Free Report) , and Citigroup Inc. (C - Free Report) are expected to report earnings on April 14. Bank of America Corporation (BAC - Free Report) and Morgan Stanley (MS - Free Report) are likely to report on April 15. The Goldman Sachs Group (GS - Free Report) is expected to come up with earnings results on April 13.
GS has a Zacks Rank #3 and an ESP of +1.48%.
JPM has a Zacks Rank #3 and an Earnings ESP of +0.52%.
C has a Zacks Rank #3 and an ESP of +0.25%.
WFC has a Zacks Rank #3 and an ESP of negative 0.14%.
BAC has a Zacks Rank #3 and an Earnings ESP of +1.00%.
MS has a Zacks Rank #3 and an Earnings ESP of 0.00%.
Are Positive ESPs Good for Financial ETFs?
As discussed above, chances of a broad-based earnings beat are moderate-to-high as most stocks are experiencing a positive ESP. We do not expect bearish earnings results from big banks, as capital market activities should be upbeat.
Interest income and investment banking revenues should be strong, per Reuters. However, rising geopolitical risks due to the Iran war add to uncertainty. Deal-making has been solid thanks to large mergers and acquisitions.
About two dozen mega deals worth over $10 billion were reached globally, along with 40 deals valued at over $5 billion, according to LSEG data, per the same Reuters article.
Can Chances of Upbeat Earnings Boost Ailing Financial ETFs?
State Street Financial Sel Sec SPDR ETF (XLF - Free Report) has lost about 6.8% so far this year (as of April 8, 2026). Vanguard Financials Index Fund ETF (VFH - Free Report) also fell about 6.3%. Over the war-laden past month, XLF and VFH have added 1.7% and 2.2%, respectively. Over the past week, both funds have advanced about 2.8% and 3.1%, respectively.
Chances of a steeper yield curve post the Fed comments on a controlled inflationary scenario in the United States have probably favored the financial funds in recent weeks. A steeper yield curve favors banks’ net interest margins. Against this backdrop, the probability of upbeat earnings should be beneficial for the related ETFs.
Bottom Line
So, whatever the earnings surprise is, investors can play these financial ETFs on the basis of yield curve movement. Hence, investors pinning hopes on a bank rally should track financial ETFs like iShares U.S. Financial Services ETF (IYG - Free Report) , iShares US Financials ETF (IYF - Free Report) , Invesco KBW Bank ETF (KBWB - Free Report) , XLF and VFH. These funds have considerable exposure to the aforementioned stocks.
Goldman has moderate exposure in the aforementioned ETFs. It is heavy on iShares U.S. Broker-Dealers & Securities Exchanges ETF IAI.