This morning, wrote:
Options traders are skeptical this week?s bank earnings will deliver calming news to a stock market enduring its worst losses in two years.
U.S. stocks have fallen for the past three days on concerns about global growth, the future of interest rates and the spread of Ebola. With companies from JPMorgan Chase & Co. (JPM) to Goldman Sachs Group Inc. and Bank of America Corp. (BAC) scheduled to report this week, demand for bearish options on the largest U.S. financial firms has increased to the highest since May 2013.
Even though banks have escaped the worst losses in the recent selloff, the companies will struggle to boost profits if the Federal Reserve keeps interest rates near zero. Analyst projections tracked by Bloomberg show financial companies in the Standard & Poor?s 500 Index increased earnings 3.1 percent in the third quarter and 1.6 percent in the fourth.
?There?s an anticipation that a significant percentage of earnings are going to lower forward guidance relatively significantly, including some of the big banks,? Jeff Sica, who helps oversee more than $1 billion as chief investment officer at Sica Wealth Management in Morristown, New Jersey, said by phone. ?That?s going to have a very negative impact on the stock market.?
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