Will Bank Earnings Lead The Way For A Market Breakout?

*Analyzing the markets with Richie Naso, a Wall Street veteran of over 40 years and former member of the NYSE.

• DJIA 52-wk: +19.16% | YTD: -0.31% | Wkly: +3.04%
• S&P 500 52-wk: +27.10% | YTD: -0.42% | Wkly: +3.56%
• NASDAQ 52-wk: +36.94% | YTD: -1.49% | Wkly: +4.68%
• VanEck Semiconductor ETF 52-wk: +117.02% | YTD: +21.31% | Wkly: +11.36%

Russell 2000 (RUT): Ripped ~4% last week on a macro-driven risk-on squeeze, then started to stall into Friday — strong tape but getting short-term stretched. Strong week — risk-on, small caps led.

Data is provided by Yahoo Finance at closing, Friday 10th April, 2026.

1. Geopolitics — From Panic to Relief

Early week: U.S.–Iran tensions / oil spike
Then: ceasefire talks + de-escalation hopes

Result:
Oil collapsed (biggest drop since 2020)
Inflation fears eased
Risk assets ripped higher

Trader Translation:
Market went from “oh no” → “maybe it’s contained”

2. Oil Crash = Rocket Fuel for Equities

Crude dropped ~12–13% on the week (WSJ)

That matters because:
lower oil → lower inflation expectations
gives the Fed breathing room
boosts cyclicals + small caps

That’s why:
Russell & Nasdaq led the move

3. Inflation Spike… But Ignored

March CPI:
+0.9% MoM
+3.3% YoY (highest since 2024)

Normally bearish… but:
market expected it
oil drop offset the fear

Tape reaction:
“Bad news… but not worse than feared = buy it”

4. Nasdaq / AI Led the Charge

Nasdaq:
+4.7% on the week
exited correction territory
~10% rally off recent lows

Leadership:
AI / tech / semis
high beta names

5. Short Squeeze + Positioning Unwind

Market had been:
weak
defensive
under-owned

The cheapest stock in America is up 520% in a year. Those are two things that shouldn’t go together. It’s like saying that the smelliest dog in town got four baths this week. How is it still the smelliest? The answer has to do with artificial intelligence—I mean for the stock, not the dog. It’s one of a few things that stand out from a recent screen for the 10 lowest forward price/earnings ratios in the S&P 500 index.

This is a semi-regular act of morbid curiosity, not a sound investment strategy. Historical data shows the 10 lowest-P/E stocks in the S&P 500 would have returned approximately 70% with dividends over the past year, outpacing the index by 49 points. Over two, five and ten years, the hypothetical outperformance figures are nine, 73 and 300 points respectively. These are hypothetical, back-tested results. They do not reflect actual investment returns and are not indicative of future performance.

I’m pretty sure that’s a fluke. The P/E is way too simplistic to be a reliable signal of value. For that, we need a team of business school graduates with spreadsheets modeling at least 10 years of hypothetical business results and then layering on concepts that are both mathematically sound and totally made up, like weighted average cost of capital, terminal value, and risk adjustment. Only then can we calculate a fair present value. I live within the gravitational pull of New York City, and my property value is riding on the continued prosperity of these spreadsheet people, so let’s not pretend that we can spot cheap stocks ourselves.

But let me run quickly through the list just the same, with a few observations. At the end, I’ll guess which of these stocks will do the best over the coming year. I have reliably poor instincts about that sort of thing, so this will be a valuable contrarian signal. You’re welcome in advance.

Micron Technology has the lowest P/E on the list: just 4.4, versus 20.5 for the S&P 500. Companies that end up on this list typically have an underperforming P, but this one has had an outrageously rising E. The company has never earned more than $12 a share, but earnings are now pegged at $56.74 a share for the fiscal year through August, and $93.24 next year, versus $8.29 last year.

Micron makes memory, which is in fierce demand for AI data centers, leading to shortages and soaring prices. Cue “Lyin’ Eyes” by the Eagles: investors who’ve seen past memory booms fizzle are wary about this one. So, the stock hasn’t climbed as quickly as the earnings.

By the way, the AI spending rush has done something similar for hard-drive maker Western Digital, which isn’t on this list, but was on it a decade ago. Its return of more than 1,000% since then is one reason the lowest-P/Eers thumped the market over that stretch. Another reason is a company called United Rentals, which has cashed in on a trend toward companies borrowing rather than buying construction equipment. It, too, has returned more than 1,000% in a decade, and is no longer close to making the lowest-P/E list.

General Motors, 6.2 times earnings, is no stranger to this list, but it has also returned 68% over the past year, and 127% over the past three, easily beating the market. It’s generating heaps of free cash by focusing on pricey trucks and sport-utility vehicles. On a somewhat related note, Delta Air Lines and United Airlines, which would have easily made this list a decade ago, have since graduated off it, and are weathering a spike in fuel prices well.

What $4 Gasoline Means for GM, Ford, and Tesla

Car stocks are taking a drubbing as oil prices soar. But it’s too soon to count them out.

Global Payments, 4.7 times earnings, and Fiserv, seven times, are heavily indebted players in a decidedly unsexy part of fintech: processing card payments for merchants. Prudential Financial, 6.9 times earnings, and Everest Group, 6.3 times, are insurance and reinsurance companies that can have lumpy earnings. Prudential’s 5.8% dividend yield is the highest on the list.

Cable companies have been losing their pay-television subscribers to streaming for years. Increasingly, telecom is coming for their cable broadband customers, too, with faster fiberoptic service. Those trends have left Charter Communications at just 5.2 times earnings.

Gen Digital, 6.8 times earnings, is a mash-up of Avast and NortonLifeLock, players in home cybersecurity. It’s growing, but also heavily indebted. The stock enjoyed little of the past decade’s run-up in shares of enterprise cyber giants like Palo Alto Networks and CrowdStrike Holdings, but has participated in all of the recent downside on AI disruption fears.

AES, 5.9 times earnings, is a debt-heavy utility that recently agreed to a buyout by BlackRock’s Global Infrastructure Partners and others.

That leaves Viatris, 5.6 times earnings. It might as well have been named Hate Sponge when it began trading in November 2020. There was a company called Mylan, which was best known for buying EpiPen, the lifesaving injector for severe allergic reactions, especially for kids, and then multiplying the price sevenfold in under a decade. It merged with a part of Pfizer that owned off-patent former blockbuster drugs for cholesterol, impotence, arthritis, and depression. The idea was to use the cash flow to produce new, growing drugs, while quietly letting the EpiPen thing fade from memory.

I think it’s working. My disgust feels like it’s down at least 40% from 2020, and I notice that Viatris’ earnings per share are expected to grow slightly this year for the first time since then, although the estimate has been slipping, so let’s see. Viatris is the name on this list I find most interesting at current levels. That is an observation, not a recommendation — readers should consult their own financial advisor before making any trading decisions. As always, we’ll let the market decide.

Big Banks’ Profits Set to Rise Even as ‘Wall of Worry’ Looms

Key Points

Despite a 6% fall in the KBW Nasdaq Bank Index, major banks are expected to report profit growth in the first quarter, driven by strong investment banking and trading.

Investors are concerned about banks’ exposure to private credit, fearing defaults in software companies could spread risk across the financial system.

Citi is favored by analysts for its improving return profile, while JPMorgan is expected to benefit from strong markets and investment banking.

The KBW Nasdaq Bank Index (BKX −0.69%) fell 6% in the first quarter for its worst performance since 2023, as the Trump administration’s war on Iran rattled investors. Still, you wouldn’t know it by looking at rosy expectations for earnings growth.

Quarterly report cards from America’s largest banks, due this week, are expected to show that profits climbed in the first quarter from a year ago, helped by strong investment banking and trading activity.

Goldman Sachs reports Monday, followed by JPMorgan Chase, Citigroup, and Wells Fargo the next day. Morgan Stanley and Bank of America are up Wednesday. If investors are heading into this marathon of filings and conference calls with questions, it is probably the one posed by UBS analyst Erika Najarian in an April 7 note to clients: “Can (solid) results overcome a wall of worry?”

The answer, it seems, is yes. “The market has been dealing with a plethora of largely negative headlines,” Najarian wrote, “but even after reducing our presumed rate cuts from two to one (in September), our estimates for ’26 and ’27 are largely unchanged.”

Investors scour bank results because they serve as windows into the economy. Consumer lenders provide data on individual borrowers’ credit quality and spending, while investment banks’ performance shows corporate clients’ confidence in dealmaking and raising capital.

For several quarters, banks’ results have reflected bumper performance for core Wall Street businesses—and solid, but not as ebullient, showings for everyday consumers. Bank CEOs have recently noted, too, that they are seeing a divergence in financial health between high- and lower-income clients.

What is left unsaid can also reflect banks’ backdrop. Banks may be reluctant to raise expectations for their full-year performance because of macroeconomic uncertainty, BofA Securities analyst Ebrahim Poonawala wrote April 6. Still, a busy quarter for trading desks and bankers, paired with a “decent setup” for net-interest income, should drive solid results, he wrote.

Beyond evaluating big banks on the usual profitability measures, shareholders will look for updates on one of the market’s most pressing concerns: private credit, the banks’ less regulated, less transparent cousin.

Investors worry that banks are overexposed to private credit players that are now coming under stress. Banks have lent billions of dollars to private credit funds. Those funds in turn lent money to, among other sectors, software providers now facing intense competition from artificial intelligence. Fears that those businesses could suffer and default have fueled concerns of risk spreading throughout the financial system.

“Lending to private credit funds has soared, led by money centers as well as superregionals and regionals,” J.P. Morgan Securities analyst Vivek Juneja wrote on April 7.

Banks and private-equity firms have generally disputed the notion that private credit threatens financial stability. But steep selloffs in the software and alternative asset-management sectors have spooked investors. Executives’ remarks on private credit—and credit quality broadly—will come into focus.

“Management commentary at earnings will likely underscore that credit is strong today, but higher-for-longer oil prices would be a risk,” Morgan Stanley analyst Manan Gosalia wrote on March 31. “We view bank lending to private credit as more of a headline risk than a fundamental risk.”

Wall Street is picking its winners. Citi’s stock has become a favorite among sell-side analysts attracted to the bank’s potential for higher returns after years of underperforming its rivals. Citi is the top choice for Wells Fargo banking analyst Mike Mayo and Bank of America’s Ebrahim Poonawala. After quarterly earnings, the New York lender led by CEO Jane Fraser is set to hold an investor presentation on May 7.

“We view Citi favorably given its improving return profile driven by broad-based revenue growth, disciplined expense control, and rising capital returns,” Jefferies analyst David Chiaverini wrote on April 8.

On her bank’s earnings call, Fraser will likely field questions about a late March Bloomberg News report that said senior leaders there recently held early-stage discussions about acquiring a bank or other type of financial firm. Citi told Bloomberg that the suggestion is “baseless speculation,” and that for now it is “solely focused” on organic growth. The bank referred Barron’s to that statement. Investors may question Fraser over acquisition strategy in May.

Earnings at JPMorgan, the largest bank of the bunch, should benefit from strong results in its markets and investment banking businesses, Piper Sandler analyst Scott Siefers wrote March 31. (For bank observers: JPMorgan usually sets the tone for quarterly earnings as the first of the big banks to report. This quarter, though, Goldman is scheduled to go first.)

In his note, Siefers, like UBS’s Najarian, lamented a “wall of worry” that banks face. Quarterly earnings “should be strong,” he wrote, “but investors have plenty of anxiety.”

That could make for an earnings season to remember.

Big banks kick off earnings season on Monday:

JPMorgan, Goldman Sachs, Citi, Bank of America, Wells Fargo, Morgan Stanley, Schwab, and U.S. Bancorp are all scheduled to report this week.

PPI on Tuesday.

The market appears to be consolidating so far in April. Bank stocks participated early in last week’s rally but lagged into the close, though the bank index remains roughly 7% above its early-April lows.

Meanwhile, SMH clearly led the tape, outperforming the broader market as semiconductors posted one of their strongest weeks in years, with a 5-day gain of about 5.4%.

If bank earnings come in solid and semis continue to lead, the market has a credible path to an upside breakout.

– Richie

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