Two dates - April 14 and April 15. That's when investors find out whether the U.S. economy is actually recovering - or just coasting on momentum from last year.
JPMorgan Chase and Bank of America release Q1 earnings back to back next week. Goldman Sachs analysts are calling it the "definitive litmus test" for the financial system's ability to handle the oil shock.
JPMorgan (JPM %) enters earnings season with a consensus EPS estimate of $5.32 to $5.50. That would be a 7% increase from last year - a strong number for the country's largest bank.
The focus will be on the Apple Card portfolio, which JPMorgan recently took over. The bank set aside $2.2 billion in reserves for it - a signal for how it views consumer credit risk right now.
Jamie Dimon's commentary on corporate deal activity will also matter. If JPMorgan says boardrooms are ready to make deals again, it could spark a rally across the entire investment banking space.
Bank of America (BAC %) is expected to post EPS of roughly $1.00. Its net interest income - the money it makes from lending - is projected to grow 5-7% for the full year.
The real story is on the trading desk. The bank is expected to report its 16th straight quarter of year-over-year trading revenue growth. March's market swings gave traders plenty to work with.
Bank of America is also rolling out "Erica 2.0" - an AI assistant that's expected to show measurable cost savings. Analysts will be listening for hard numbers on the "AI dividend."
The banking sector is in the middle of a structural shift. Net interest income - the engine of growth for the last two years - is flattening as the Fed holds rates steady.
Fee-based revenue, trading, and AI-driven efficiency are the new growth story.
If both banks deliver strong numbers and optimistic guidance, expect a rotation into cyclical stocks. If the tone is cautious, investors may head for defensive plays.
These two reports set the tone for the rest of earnings season.
