Shares of JPMorgan Chase (JPM) have rebounded this week with the broader market, which gained momentum after investors appeared to support the Federal Reserve’s moves to blunt decades-high inflation. So is JPM stock worth buying right now?
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The Fed on Wednesday raised its key interest rate for the first time since 2018. Policymakers at the central bank also indicated their expectations for seven quarter-percentage-point rate increases this year. They see at least three more next year.
Higher interest rates from the Fed allow banks like JPMorgan to raise their own interest rates on things like credit cards and auto loans. When the Fed raises its key interest rate, it makes borrowing money more expensive. That can cool off an economy that might be running too hot. But it also runs the risk of damaging the economy overall.
Prices have risen following a flood of pandemic-related stimulus aid and strains on the supply chain that pushed up shipping costs, after many consumers bored and stuck at home began buying more goods. Russia’s invasion of Ukraine last month also sent oil prices soaring.
JPMorgan in January also reported mixed fourth-quarter results. Earnings per share beat expectations. But revenue missed.
A big increase in merger deals and a strong IPO market lifted investment banking. But markets revenue fell, after a jump in 2020. Rising costs — to attract and retain employees, open new branches and bolster JPMorgan’s technology — also worried some analysts.
Management also said its return on tangible capital equity, another profitability gauge, could stay below its target of 17% for the next one to two years, as inflation persists, markets return to earth and other spending by the bank continues. That outlook came despite a still-strong economy.
JPMorgan is the biggest U.S. bank by market value. 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.
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JPM Stock Fundamental Analysis
JPMorgan stock has a 53 Composite Rating, on a 1-99 scale, with 99 tops. Its EPS Rating stands at 64.
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
JPM stock is currently trading at around 140.
The stock, and its relative strength line, have rebounded in recent days. Longer term, 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.
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Is JPM Stock A Buy?
JPMorgan has a market value of around $413 billion, according to MarketSmith. Its business is a one-stop financial shop for Wall Street and Main Street. But the stock is not in a base.
Bottom line: JPM stock is not a buy right now, based on IBD’s chart analysis.
Like other big banks, JPMorgan also has a poor record when it comes to beating the market for long stretches.
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Follow Bill Peters on Twitter at @IBD_BPeters.
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Source: https://www.investors.com/news/jpm-stock-buy-now/?src=A00220&yptr=yahoo