Bank earnings are this week in Canada and many top financial stocks have been climbing in anticipation of what could be some much-improved results. In November, shares of Toronto-Dominion Bank (TSX:TD)(NYSE:TD) climbed to over $70 for the first time since February.
Part of the rally likely has to do with a more positive outlook for the economy now that multiple vaccine companies are reporting positive results. Although it may still be months away before there's a big recovery in the economy, there's at least a light at the end of the tunnel for investors.
Royal Bank of Canada (TSX:RY)(NYSE:RY) stock is performing even better, trading near its 52-week high of $109.42. The downside for income investors is that these rising prices mean that the divided yields these bank stocks were offering are now back to their pre-pandemic levels.
How these stocks perform here on out will largely depend on their upcoming earnings results and what their outlooks are for the future. Royal Bank reports its earnings on Dec. 2 while TD is set to release its results the following day.
The markets are a bit too optimistic of late given the vaccine news and investors should pull back their expectations. It's still a long road ahead for the economy. Some jobs that have been lost during the pandemic won't return and that means that the economy may not make a full recovery even once COVID-19 is no longer a concern. And that's why bank stocks may be a bit too expensive to buy right now.
