Wells Fargo, Goldman Sachs, and Citigroup Are All Soaring. Here's Why.

Core Insights - The stock market experienced a strong performance, with major bank stocks leading the gains due to impressive earnings reports and improved inflation data [1][2][6] Group 1: Bank Earnings - Wells Fargo reported better-than-expected bottom-line results despite missing revenue expectations, with a forecast for higher net interest income in 2025 and a 59% year-over-year increase in investment banking fees [3] - Goldman Sachs exceeded analyst estimates on both revenue and net income, with trading revenue showing significant growth in both equities and fixed income, and asset and wealth management revenue rising by 8% [4] - Citigroup not only surpassed expectations on revenue and net income but also announced a $20 billion stock buyback, representing about 14% of its market cap, with investment banking revenue increasing by 35% and trading revenue soaring by 36% [5] Group 2: Inflation Data - Improved inflation data has contributed to the rise in bank stocks, as net interest margins have been under pressure from rising interest rates [6] - Recent inflation reports showed the Producer Price Index (PPI) was significantly lower than expected, and the core Consumer Price Index (CPI) for December was reported at 3.2% year-over-year, compared to the expected 3.3% [7] - A lower-than-expected inflation rate could lead the Federal Reserve to lower interest rates more aggressively, potentially benefiting bank profits in 2025 and beyond [8]