JPMorgan (NYSE:JPM) stock has dropped 3.8% in 2020 as of late afternoon trading on January 27. In January, JPMorgan posted the biggest profit of any bank in United States history; an annual profit of $36.4 billion in 2019, which sent the stock up the day of the earnings release. However, it has waned since the early bump.
In the fourth quarter, JPMorgan saw profit rise 21% year-over-year to $8.52 billion or $2.57 per share. Managed revenue increased 9% to $29.2 billion. Profit in its investment bank shot up 48% to $2.9 billion on the back of trading results. Bond trading revenue soared 86% to $3.4 billion which blew away analyst estimates.
U.S. banks will continue to face pressure as low interest rates weigh on margins going forward. The Federal Reserve elected to slash interest rates three times in 2019. At the same time, continued loose monetary policy has proven to be a fertile ground for investment especially following the U.S. Tax Cuts and Jobs Act.
This accommodating monetary policy is likely to continue for the duration of the Trump administration, but the 2020 election looms large. Increasingly, Bernie Sanders is looking like the Democratic frontrunner ahead of the primaries that start in Iowa on February 3, 2020. Wall Street has shown hostility to a Sanders presidency, so investors should keep their eye on this development.
JPMorgan stock last possessed a price-to-earnings ratio of 12 and a price-to-book value of 1.7. Shares last had an RSI of 36 – trending toward technically oversold territory. I like JPMorgan as a buy-the-dip candidate in the near term.
