Q3 earnings reporting season begins today with the release of earnings of some big U.S. banks. Analysts will scour the results to see if earnings in the sector are beginning to recover. Bank stocks are trading near their lowest level of the year following the collapse of First Republic Bank in May. The KBW Bank Index ($BKX) is down -24% this year, sharply underperforming the +14% gain in the S&P 500 Stock Index ($SPX) (SPY).
Bank stocks face many headwinds, from rising interest rates to increased regulations. There are new regulatory proposals that would impose higher capital requirements on banks. Also, unrealized losses in their securities portfolios and rising bad loan write-offs are undercutting profitability for many banks. Pipe Sandler said, “Investors in the bank space just have a half-dozen issues that are out there that need to get resolved to their better satisfaction.”
