Global equities are reeling again on Wednesday as not one but three central banks (New Zealand, Thailand and India) cut interest rates as policymakers around the world struggle to get in front of weakening economic fundamentals and what looks like a burgeoning currency war between the major powers in Asia, Europe, and the United States.
It’s a race to the bottom, as competitive devaluations become the norm in the wake of worsening trade tensions between the U.S. and China. Beijing fired the latest salvo this week, with an aggressive cut to the valuation of the yuan in response to President Trump’s threat to slap a 10% tariff on all remaining untariffed Chinese imports — which would include things like new Apple (NASDAQ: AAPL ) iPhones.
Lower interest rates, at at time when negative interest rates are becoming more common around the world, will only further pressure bank earnings as the difference between long-term interest rates (which are falling fast) and short-term interest rates declines.
Here are five major bank stocks to sell now:
Bank of America (BAC)
The first of our bank stocks, Bank of America (NYSE: BAC ) is falling further below its 200-day moving average, testing the critical lows set in March and again in May. A violation of those levels would set the stage for a decline back to the December lows, which would be worth a loss of roughly 17% from here.
The company will next report results on October 16 before the bell. Analysts are looking for earnings of 68 cents per share on revenues of $22.9 billion. When the company last reported on July 17, earnings of 74 cents per share beat estimates by three cents on a 2.7% rise in revenues.
Citigroup (NYSE: C ) shares are testing their 200-day moving average, threatening a return to their March lows which would be worth a loss of around 8% from here. This caps a sideways consolidation range going back to late 2017. This comes after analysts at Keefe Bruyette upgraded the stock in anticipation of an “extended” economic cycle. Bad timing on that one.
The company will next report results on October 15 before the bell. Analysts are looking for earnings of $1.96 per share on revenues of $18.5 billion. When it last reported on July 15 earnings of $1.95 beat estimates by 15 cents on a 1.6% rise in revenues.
JPMorgan (NYSE: JPM ) shares are testing their 200-day moving average, threatening to break below their late May lows and return to levels last tested in March. The drop would be worth a loss of roughly 8% from here. This caps a sideways consolidation range going back to early 2018. JPM is among five banks that will face a lawsuit ( Editor’s Note: paywall ) in Europe accusing them of manipulating foreign exchange markets.
The company will next report results on October 15 before the bell. Analysts are looking for earnings of $2.44 per share on revenues of $28.1 billion. When the company last reported on July 16, earnings of $2.82 beat estimates by 33 cents per share on a 3.9% jump in revenues.
Wells Fargo (WFC)
Wells Fargo (NYSE: WFC ) shares are testing lows near the $45-a-share threshold, continuing to struggle below its 200-day moving average and threatening a return to its late December low. This caps a two-year long downtrend pattern going back to early 2018 as shares are mired near levels seen throughout 2016. Shares were recently downgraded by analysts at Macquarie.
The bank stock will next report results on October 15 before the bell. Analysts are looking for earnings of $1.17 per share on revenues of $20.7 billion. When WFC last reported on July 16, earnings of $1.30 beat estimates by 14 cents on a 0.1% rise in revenues.
Morgan Stanley (MS)
Shares of Morgan Stanley (NYSE: MS ) are collapsing down the right side of what looks like a multi-month head-and-shoulders reversal pattern, setting up a decline back to the December lows and beyond. Such a move would, at the least, be worth a 10% decline from here. This, in turn, make the right shoulder of an even larger head-and-shoulders reversal pattern that traces back to 2016 and could set the stage for a 50%+ decline.
The company will next report results on October 15 before the bell. Analysts are looking for earnings of $1.22 per share on revenues of $9.9 billion. When the company last reported on July 18, earnings of $1.23 beat estimates by seven cents on a 3.4% decline in revenues.
As of this writing, the author held no positions in the aforementioned securities.
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