Big Banks’ Modest Earnings Outlook Opens Door for More Gains

As the biggest US banks kick off earnings season this week, strategists say Wall Street’s subdued profit expectations are setting the stage for lenders to continue their sizzling run in the stock market.

The group has been on a roll, with the KBW Bank Index — which includes 24 lenders, among them JPMorgan Chase & Co. and Citigroup Inc. — up 37% from its April low and hovering near a record. That’s more than the broad S&P 500 Index’s advance and better than even the tech-heavy Nasdaq 100 Index, which has gained around 31% in the same period.