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Bank Earnings Look Strong Ahead of Q2: ETFs in Focus
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Key Takeaways
Most big banks have a positive Earnings ESP, signaling higher odds of Q2 earnings beats.
Strong dealmaking, IPOs and NII trends could support bank earnings and financial ETFs.
XLF, IYG, IYF, VFH and IAI are key ETFs to watch as the bank earnings season begins.
The war in Iran and economic growth concerns spooked investors in the latter part of first-quarter 2026. The broader market slumped and bank stocks were no exception. However, the market has recovered since April. Fragile truce talks in the second quarter of 2026 bolstered the risk-on sentiments in the market and bank stocks too recovered considerably.
Invesco KBW Bank ETF (KBWB - Free Report) has advanced 9.3% so far this year (as of July 8, 2026) while the fund has added about 12% over the past three months. This performance indicates that banking stocks are in a sweet spot ahead of the second-quarter earnings season.
Note that 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 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, Goldman Sachs Group (GS - Free Report) , JPMorgan Chase & Co. (JPM - Free Report) , Wells Fargo & Company (WFC - Free Report) , Bank of America Corporation (BAC - Free Report) and Citigroup Inc. (C - Free Report) will report earnings on July 14. Morgan Stanley (MS - Free Report) will report on July 15.
GS has a Zacks Rank #2 and an ESP of 0.00%.
JPM has a Zacks Rank #3 and an Earnings ESP of +1.77%.
WFC has a Zacks Rank #3 and an Earnings ESP of +0.09%.
BAC has a Zacks Rank #3 and an Earnings ESP of +0.64%.
C has a Zacks Rank #3 and an Earnings ESP of +0.64%.
MS has a Zacks Rank #3 and an Earnings ESP of +0.86%.
Are Positive ESPs Good for Financial ETFs?
As discussed above, chances of a broad-based earnings beat are high as most stocks have a positive ESP. We do not expect bearish earnings results from big banks, as capital market activities are in an upbeat mode.
Interest income and investment banking revenues are strong. Deal-making has been solid, thanks to large mergers and acquisitions. IPO activities and debt issuances have been in great shape.
Inside Earnings & Revenue Growth Expectations
Below, we mention the Zacks Consensus Estimate for second-quarter earnings per share (EPS) and revenues of the big six banks (as of July 8, 2026).
JPM: EPS of $5.52 (up 11.29% year over year) on revenues of $48.71 billion (up 8.45% year over year)
WFC: EPS of $1.74 (up 12.99% year over year) on revenues of $21.80 billion (up 4.71% year over year)
C: EPS of $2.72 (up 38.78% year over year) on revenues of $23.68 billion (up 9.28% year over year)
BAC: EPS of $1.13 (up 26.97% year over year) on revenues of $30.62 billion (up 15.69% year over year)
GS: EPS of $14.47 (up 32.63% year over year) on revenues of $16.49 billion (up 13.10% year over year)
MS: EPS of $2.89 (up 35.68% year over year) on revenues of $19.38 billion (up 15.43% year over year)
Can Chances of Upbeat Earnings Boost Financial ETFs Further?
First Trust NASDAQ Bank ETF FTXO has advanced about 7.4% so far this year (as of July 8, 2026) and risen about 8% over the past three months. Vanguard Financials Index Fund ETF Shares (VFH - Free Report) is up 0.4% so far this year and has surged about 7.8% over the past three months (as of July 8, 2026).
Chances of a steeper yield curve are likely ahead as weaker June jobs data may lead the Fed to act in a less hawkish manner. A steeper yield curve favors banks’ net interest margins. Against this backdrop, the probability of upbeat earnings should be extremely beneficial for the related ETFs.
Bottom Line
The likelihood of positive earnings surprise and a steeper yield curve make the case for financial ETF investing stronger. 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) , State Street Financial Sel Sec SPDR ETF (XLF - Free Report) and VFH. These funds have considerable exposure to the aforementioned stocks.
The aforementioned ETFs have moderate exposure to Goldman. iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI - Free Report) has significant exposure to the stock.
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Bank Earnings Look Strong Ahead of Q2: ETFs in Focus
Key Takeaways
The war in Iran and economic growth concerns spooked investors in the latter part of first-quarter 2026. The broader market slumped and bank stocks were no exception. However, the market has recovered since April. Fragile truce talks in the second quarter of 2026 bolstered the risk-on sentiments in the market and bank stocks too recovered considerably.
Invesco KBW Bank ETF (KBWB - Free Report) has advanced 9.3% so far this year (as of July 8, 2026) while the fund has added about 12% over the past three months. This performance indicates that banking stocks are in a sweet spot ahead of the second-quarter earnings season.
Note that 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 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, Goldman Sachs Group (GS - Free Report) , JPMorgan Chase & Co. (JPM - Free Report) , Wells Fargo & Company (WFC - Free Report) , Bank of America Corporation (BAC - Free Report) and Citigroup Inc. (C - Free Report) will report earnings on July 14. Morgan Stanley (MS - Free Report) will report on July 15.
GS has a Zacks Rank #2 and an ESP of 0.00%.
JPM has a Zacks Rank #3 and an Earnings ESP of +1.77%.
WFC has a Zacks Rank #3 and an Earnings ESP of +0.09%.
BAC has a Zacks Rank #3 and an Earnings ESP of +0.64%.
C has a Zacks Rank #3 and an Earnings ESP of +0.64%.
MS has a Zacks Rank #3 and an Earnings ESP of +0.86%.
Are Positive ESPs Good for Financial ETFs?
As discussed above, chances of a broad-based earnings beat are high as most stocks have a positive ESP. We do not expect bearish earnings results from big banks, as capital market activities are in an upbeat mode.
Interest income and investment banking revenues are strong. Deal-making has been solid, thanks to large mergers and acquisitions. IPO activities and debt issuances have been in great shape.
Inside Earnings & Revenue Growth Expectations
Below, we mention the Zacks Consensus Estimate for second-quarter earnings per share (EPS) and revenues of the big six banks (as of July 8, 2026).
JPM: EPS of $5.52 (up 11.29% year over year) on revenues of $48.71 billion (up 8.45% year over year)
WFC: EPS of $1.74 (up 12.99% year over year) on revenues of $21.80 billion (up 4.71% year over year)
C: EPS of $2.72 (up 38.78% year over year) on revenues of $23.68 billion (up 9.28% year over year)
BAC: EPS of $1.13 (up 26.97% year over year) on revenues of $30.62 billion (up 15.69% year over year)
GS: EPS of $14.47 (up 32.63% year over year) on revenues of $16.49 billion (up 13.10% year over year)
MS: EPS of $2.89 (up 35.68% year over year) on revenues of $19.38 billion (up 15.43% year over year)
Can Chances of Upbeat Earnings Boost Financial ETFs Further?
First Trust NASDAQ Bank ETF FTXO has advanced about 7.4% so far this year (as of July 8, 2026) and risen about 8% over the past three months. Vanguard Financials Index Fund ETF Shares (VFH - Free Report) is up 0.4% so far this year and has surged about 7.8% over the past three months (as of July 8, 2026).
Chances of a steeper yield curve are likely ahead as weaker June jobs data may lead the Fed to act in a less hawkish manner. A steeper yield curve favors banks’ net interest margins. Against this backdrop, the probability of upbeat earnings should be extremely beneficial for the related ETFs.
Bottom Line
The likelihood of positive earnings surprise and a steeper yield curve make the case for financial ETF investing stronger. 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) , State Street Financial Sel Sec SPDR ETF (XLF - Free Report) and VFH. These funds have considerable exposure to the aforementioned stocks.
The aforementioned ETFs have moderate exposure to Goldman. iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI - Free Report) has significant exposure to the stock.