... Trade Reviews Bank earnings and technical barriers cap Dow Jones gains

Bank earnings and technical barriers cap Dow Jones gains

Mixed quarterly results from major US banking institutions fail to sustain market momentum as the Dow Jones encounters significant technical resistance amidst heightened global uncertainty.

By Daniel Mejía | 3h ago

While Bank of America surpassed expectations, Wells Fargo and Citigroup delivered lacklustre revenue figures, dampening investor sentiment.
Persistent global uncertainty continues to weigh on the index, limiting the upside despite a long-term bullish structure.
The index faces immediate resistance near the 49,500 mark, with momentum indicators suggesting the market is approaching overbought territory.

Bank of America, Wells Fargo, and Citigroup diverge from market expectations; Dow Jones stalls

Recent reports from leading US financial institutions presented a fragmented picture of sector health. While Bank of America managed to outperform earnings per share (EPS) and revenues estimates, both Wells Fargo and Citigroup failed to exceed total revenue projections, leading to a market close of consolidation for the broader market.

Bank of America successfully surpassed expectations in both revenue and profitability on Q4. The bank recorded a year-over-year revenue increase of 11.9%, complemented by a prominent 19% growth in EPS. Conversely, Wells Fargo’s performance was more nuanced; although it failed to meet revenue forecasts—posting a modest year-over-year increase of 4.4%—it did exceed profit estimates with a 13% rise in EPS. Citigroup exhibited a decreasing trend, falling short of revenue expectations with a marginal 1.5% year-over-year growth, while simultaneously reporting an 11.2% year-over-year decline in earnings per share.

These inconsistent results from the "megabanks" failed to bolster US market sentiment, which remains sensitive to elevated levels of global geopolitical instability. Consequently, the Dow Jones Industrial Average closed with a marginal depreciation of 0.09%, settling at 49,149 points.

Technical analysis of the Dow Jones index

From a technical perspective, the Dow Jones continues to adhere to a long-term bullish framework. However, the immediate price action suggests a period of caution. Key observations include:

Trend Context: Over the long term, the index maintains a classic market structure characterized by higher highs and higher lows. Price action remains comfortably positioned above the 50, 100, and 200-period Simple Moving Averages (SMAs). Nevertheless, the emergence of short-term resistance indicates that current upward momentum may encounter immediate headwinds.
Resistance Levels: Should the index achieve a decisive breach of the short-term resistance at 49,500, the market’s focus will likely shift toward the significant psychological milestone of 50,000. A sustained move above this threshold would signal an extension of the bull market into uncharted territory.
Support Levels: On the downside, immediate support is identified at 48,000, a level that converges with the 50-day moving average. A failure to maintain this floor would bring the medium-term support level of 45,900 into focus. A breach of the 45,900 zone would notably increase the probability of a more profound structural correction.
Momentum Indicators: Both the MACD and RSI are currently exhibiting neutral performance. However, they are hovering near overbought territory, suggesting that the potential for a short-term pullback remains elevated.