JPMorgan Chase (JPM) on Wednesday reported third-quarter earnings that were better than expected. So is JPM stock worth buying right now?
The banking giant reported a 60% jump in equity trading revenue, while fixed-income trading revenue fell 30%. CEO Jamie Dimon said “the economy continues to show good growth — despite the dampening effect of the delta variant and supply chain disruptions.”
The Federal Reserve said in September that moderating the pace of its bond-buying activity — one of the central bank’s main tools for infusing money into the economy and keeping interest rates low — “may soon be warranted,” after months of pandemic-related relief. Fed Chair Jerome Powell said the central bank could complete those purchases by the middle of next year.
More Fed policymakers also see an increase in the Fed’s own key interest rate next year, a move that would give big banks like JPMorgan more leeway to raise rates, and in turn profits, on their own loans.
JPMorgan is the biggest U.S. bank by market value. Markets see it as a window into U.S. consumer spending and corporate sentiment. But despite the bank’s reputation, JPMorgan stock has largely trailed the S&P 500 since 1986. Here’s a breakdown of the JPM stock chart and financials.
JPM Stock Fundamental Analysis
IBD encourages investors to focus on stocks with Composite Ratings of 90 or higher.
The stock’s SMR Rating is a C, with ‘A’ the highest possible rating.
JPMorgan Stock Technical Analysis
Longer term, however, the RS line shows that JPM stock has largely moved in line with the market going back to 1998, or even 1986. That’s also a problem for banking giants such as Citigroup (C), Goldman Sachs (GS) and Bank of America (BAC). While bank stocks benefit in tandem with the economy, if the economy is doing well, so will the stock market generally.
Long-term outperformance has been ephemeral for JPM stock, even though it has generally outperformed its big peers.
Put another way, if you bought the SPDR S&P 500 ETF (SPY) back in 1998, you’d have the same or better returns with far less risk.
JPMorgan stock and its rivals can have periods of outperformance, as they did near the end of 2019. JPM stock, Goldman Sachs, Bank of America and others outperformed the market from April 2016 to March 2017, with most of those gains following former President Trump’s surprise election victory.
Is JPM Stock A Buy?
JPMorgan has a market value of around $481 billion, according to MarketSmith. Its business is a one-stop financial shop for Wall Street and Main Street. JPMorgan’s earnings have benefited from the economic recovery.
Bottom line: JPM stock is not a buy, based on IBD’s chart analysis. And like other big banks, JPMorgan has a poor record when it comes to beating the market for long stretches.
Follow Bill Peters on Twitter at @IBD_BPeters.
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