Dj Usa Shale Is Growing Old. That's A Problem For Donald Trump's Oil Plans.

By Rebecca Ungarino

Shares of big U.S. banks are on pace for their biggest gains in five years, driven by a solid economy, falling interest rates, and investors' hopes for both a lighter touch from regulators and increased merger activity under President-elect Donald Trump.

Improving outlooks for several large lenders that have lagged behind their rivals in recent years, such as Wells Fargo and Citigroup, have contributed to that performance, but the strength of the broader market has contributed as well. The S&P 500 has set 57 record highs this year.

"Investor interest in the group appears to be at multiyear highs, although our sense is there remains room for investor weightings in the space to increase, underpinning our positive outlook," D.A. Davidson financial sector analysts wrote in a report to clients this month.

The S&P 500 Banks Industry Group Index, which includes Wells, Citi, JPMorgan Chase, and large regional lenders such as Fifth Third Bancorp, has risen 35.5% in 2024, its best performance since 2019. The SPDR S&P Bank ETF is up 21% while the Financial Select Sector SPDR ETF has gained 30%. Both are on track for their biggest yearly gains since 2021.

Gerard Cassidy, co-head of global financials research at RBC Capital Markets, wrote to clients that he expects the picture for banks to improve. He says that is thanks to the likelihood of a steeper yield curve, tepid loan growth accelerating — led by lending to businesses — M&A activity picking up, and regulatory easing.

As Cassidy and other longtime bank watchers have noted, the risks to that broadly shared thesis and the unknowns are numerous. Hopes and expectations that many bank sector investors have for widespread deregulation are, for now, just that — hopes and expectations.

The candidates selected by Trump to lead the Securities and Exchange Commission, the Treasury Department, and the Federal Trade Commission are generally viewed as having friendlier postures toward financial firms' activities than their predecessors. Yet those picks have not outlined their plans, and their agendas could bring less satisfaction for investors than they're counting on.

A tangle of other factors, from the possibility of re-emerging inflation and threats of new tariffs, could also unsettle the market, crimp consumer spending, and set back bank performance.

Still, Wall Street's view on banks' health is bullish. Morgan Stanley equity analysts have been calling for a rebound in capital markets as a boon for big banks. They now expect investment bank revenues to surpass the highs of 2021 — a banner year for deal volume — by 2026.

Write to Rebecca Ungarino at rebecca.ungarino@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

By Ross Snel

JPMorgan Chase has operated a self-directed online brokerage offering for years. But now the nation's largest bank is putting a renewed push on growing that business, adding new features such as fractional shares and trust accounts. The offering already has nearly $100 billion in assets, but Paul Vienick, who heads J.P. Morgan Online Investing, sees lots of room for growth. The key will be tapping the company's existing banking and wealth management clients, some of whom may want self-directed accounts in addition to full-service financial advice.

Among other most-read wealth management articles this week:

Top broker stocks . KBW analyst Kyle Voigt picked Charles Schwab and LPL Financial as his two top brokerage stock picks for 2025, raising earnings estimates for both companies. The brokerage industry has been bedeviled by cash sorting, a process by which customers move uninvested cash from low-yielding (but profitable) sweep accounts to higher-paying options. Voigt says cash sorting is abating, and that should give brokerage firms — and Schwab in particular — a lift. Meanwhile, LPL's new leadership is focused on margin expansion — another point in its favor, according to Voigt.

Changes at J.P. Morgan Asset Management . JPMorgan Chase has quietly tapped company veteran Jonathan Sherman to serve as head of U.S. Equity at its $3.5 trillion asset-management unit. He succeeds Lee Spelman, who now serves as vice chair of global equities at J.P. Morgan Asset Management.

Major League tax lessons . Baseball star Juan Soto has managed to strike a very lucrative deal: a record-setting $765 million, 15-year contract with the New York Mets. That is an eye-popping amount of money, and it could come with a hefty tax bill. Although Soto's particular situation is rare, examining it can offer lessons for other wealthy people with multiyear contracts. Among the takeaways, according to tax experts: Do your tax planning around paydays; don't ignore state taxes, because they can be significant; and start estate planning early.

Edward Jones, Osaic, Cambridge to pay back clients . The brokerage industry's top cop ordered the three wealth management companies to pay a combined $8.2 million in restitution to clients. Finra said Edward Jones, Osaic, and Cambridge Investment Research failed to provide clients with fee rebates on mutual fund purchases that they were entitled to. Finra didn't levy fines in addition to the ordered restitution, citing the firms' "extraordinary" cooperation with its investigation. Each of the firms consented to the entry of Finra's findings, without admitting or denying the charges.

Got AI? 2025 likely will be the year that wealth management firms start deploying AI at scale, writes guest columnist Rob Pettman, chief revenue officer and president of Tifin. The risk of missing out on AI's benefits has become too significant to treat it as an afterthought, he says. AI has the potential to transform how advisory firms operate in several areas, including valuing and doing due diligence on private-market investments, according to Pettman.

Write to Ross Snel at ross.snel@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

The S&P 500 Index today is down -1.16%, the Dow Jones Industrials Index is down -0.75%, and the Nasdaq 100 Index is down -1.71%. March E-mini S&P futures (ESH25) are down -1.34%, and March E-mini Nasdaq futures (NQH25) are down -1.87%.

Stocks today are moderately lower, weighed down by a selloff in the Magnificent Seven technology stocks. On the positive side, energy stocks are climbing today with the price of WTI crude oil up more than +1%. Thin trading conditions and low volumes due to holiday trading this week and next are leading to exaggerated moves in stocks.

The US Nov trade deficit widened to -$102.9 billion from -$98.3 billion in Oct, a larger deficit than expectations of -$101.2 billion, a negative development for Q4 GDP and bearish for stocks.

US Nov wholesale inventories unexpectedly fell -0.2% m/m versus expectations of a +0.1% m/m increase. Nov retail inventories rose +0.3% m/m, right on expectations.

Strength in Asian equity markets is supportive of US stocks. China’s Shanghai Composite Stock Index rose to a 2-week high today on the prospects of additional stimulus to bolster its economy. Japan’s Nikkei Stock index rallied to a 5-1/4 month high today, led by strength in exporters as the yen weakened to a 5-month low against the dollar. Also, better-than-expected economic news on retail sales and industrial production boosted Japanese stocks.

The markets are discounting the chances at 11% for a -25 bp rate cut at the January 28-29 FOMC meeting.

Overseas stock markets today are higher. The Euro Stoxx 50 rose to a 1-week high and is up +0.48%. China’s Shanghai Composite Index climbed to a 2-week high and closed up +0.06%. Japan’s Nikkei Stock 225 rallied to a 5-1/4 month high and closed up +1.80%.

Interest Rates

March 10-year T-notes (ZNH25) today are down -1 tick. The 10-year T-note yield is up +0.4 bp to 4.587%. Mar T-notes today are slightly lower and are under pressure from carryover weakness in European and Japanese government bonds. 10-year German bunds fell to a 1-1/4 month low, 10-year UK Gilts fell to a 1-week low, and 10-year Japanese JGB bonds dropped to a 13-year low. T-notes are also weighed down on the concern that President-elect Trump’s policy agenda may spark growth and inflation and potentially worsen the US fiscal backdrop. T-notes recovered most of their losses after a slump in stocks boosted safe-haven demand for government debt.

European government bond yields today are moving higher. The 10-year German bund yield climbed to a 1-1/4 month high of 2.403% and is up +5.9 bp to 2.383%. The 10-year UK gilt yield rose to a 1-week high of 4.645% and is up +4.5 bp to 4.611%.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its January 30 policy meeting and at 12% for a -50 bp rate cut at that meeting.

US Stock Movers

Mega-cap technology stocks are moving lower today and are weighing on the broader market. Nvidia is down more than -3% to lead losers in the Dow Jones Industrials. Also, Amazon.com , Microsoft , and Alphabet are down more than -2%. In addition, Apple and Meta Platforms are down more than -2%.

Tesla is down more than -3% on reports that rental car company Hertz is so desperate to shed its inventory of Tesla cars that it is aggressively sending cheap buyout options to rental customers.

Netflix is down more than -2% on less-than-favorable reviews for the company’s new “Squid Game Season 2” season released Thursday.

Crowdstrike Holdings is down more than -3% on signs of insider selling after an SEC filing showed CEO Kurtz sold $6.5 million of shares on Monday.

Broadcom is down more than -2% on signs of insider selling after an SEC filing showed CFO Spears sold $2.89 million of shares last Friday.

KKR & Co is down more than -1% after the Fly reported the company, along with Bain Capital, each offered over $5 billion for Japan’s Seven & I’s non-core assets.

Fastenal is down more than -2% after announcing that CFO Lweis will resign in April.

Lamb Weston Holdings is up more than +3% to lead gainers in the S&P 500 after an amended 13D regulatory filing showed Jana Partners LLC reported a holding in the company.

Energy producers and energy service providers are moving higher today, with the price of WTI crude oil rising more than +1%. APA Corp and Occidental Petroleum are up more than +1%. Also, Haliburton , Schlumberger , Exxon Mobil , and Devon Energy are up more than +0.6%. In addition, Chevron is up 0.32% to lead gainers in the Dow Jones Industrials.

Progyny is up more than +11% on signs of insider buying after an SEC filing showed Executive Chairman Schlanger bought $2.2 million shares on Thursday.

Amedisys is up more than +4% after the company and UnitedHealth Group gave themselves more time for UnitedHealth Group to complete the $3.3 billion deal to purchase the company.

Tencent Music Entertainment Group ADRs are up +0.63% after 86Research upgraded their recommendation on the ADRs to buy from hold with a price target of $14.

Earnings Reports (12/27/2024)

Daily Journal Corp (DJCO), Dakota Gold Corp (DC), Immersion Corp (IMMR).

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.

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