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Get Bullish on Charles Schwab, Bearish on State Street

When Charles Schwab (SCHW) stock found support at $50, it set the stage for a post-earnings rally.

Schwab posted revenue growing by 9.6% Y/Y to $5.12 billion. Shareholders are less fearful of the media-fueled banking industry panic. Chances are low that customers would frantically withdraw deposits. Unfortunately, recent investors who bought the stock at $60 or more will have paper losses.

Schwab paused its buyback program, which will hurt shareholders in the near term. This will bolster its cash on hand, increase investor confidence, and strengthen its balance sheet.

Regional banks continue to struggle. State Street (STT) has poor growth prospects, reaffirmed after it posted Q1 results. It earned $1.52 a share, down from $1.57 Y/Y. Fee income fell to $2.34 billion versus $2.57 billion last year. State Street suffered from lower average market levels on servicing and management fees.

Truist (TFC) is another post-ER selloff stock. Its merger is in the third year. This deal failed to realize shareholder value. Truist tightened its credit and reduced its risk appetite. It will maintain its focus on high-quality, long-term clients. While investors should remain bearish on TFC stock, add it to the watch list for now.

Truist will need a stronger economy to grow. Schwab should report steady business conditions regardless of the macro conditions.