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Market Updates News Commentary - Third-quarter earnings season opens Tuesday with four of the largest U.S. banks reporting before the bell and a fifth following on Wednesday. They report after a demanding stretch for bank shares: over the past month the KBW Nasdaq Bank Index has fallen 9.7% while the S&P 500 gained about 1.5%, according to The Motley Fool, as the 10-year Treasury yield climbed to its highest level since 2002 and the Federal Reserve delivered its first rate increase in more than three years. The results will show whether the trading and dealmaking strength the banks reported in the second quarter carried through the summer. Companies mentioned in today's commentary include: JPMorgan Chase & Co. (NYSE: JPM), The Goldman Sachs Group, Inc. (NYSE: GS), Wells Fargo & Company (NYSE: WFC), Citigroup Inc. (NYSE: C), Morgan Stanley (NYSE: MS).
Key Takeaways
- JPMorgan Chase, Goldman Sachs, Wells Fargo and Citigroup report third-quarter results on Tuesday, October 13; Morgan Stanley follows on Wednesday, October 14.
- The September Consumer Price Index is released Wednesday at 8:30 a.m. ET, in the middle of the bank reporting schedule.
- In the second quarter, JPMorgan's equity markets revenue rose 86%, Goldman Sachs' equities net revenues rose 72% and Morgan Stanley reported record equity trading revenues of $6.3 billion.
- Wells Fargo reported average loan growth of 12% year over year in the second quarter, and Citigroup reported a return on tangible common equity of 13.0%.
- Higher yields can support lending margins over time while reducing the value of bonds banks already hold, which makes net interest income and credit quality central to this quarter's reports.
Why This Quarter Matters
Bank shares have been sensitive to the move in long-term rates. The 10-year Treasury yield closed Friday at 5.24% after recently reaching its highest level since 2002, and the University of Michigan's preliminary October survey showed consumers expect inflation of 4.7% over the next year. Rising yields reduce the market value of fixed-rate securities on bank balance sheets and can push depositors toward higher-yielding alternatives, even as they allow banks to earn more on new loans.
Against that backdrop, the second quarter set a high bar. All five banks reported higher earnings than a year earlier. JPMorgan said revenue in each of its lines of business hit a new record, and Morgan Stanley reported record net revenues and record equity trading revenues. The September Consumer Price Index, due from the U.S. Bureau of Labor Statistics on Wednesday, October 14, will arrive while investors are still digesting the first wave of results and will shape expectations for the Federal Reserve's next move.
CONTINUED... Read the full earnings-week preview in The Roadmap at: stockpreachers.com
The Banks Reporting This Week
JPMorgan Chase & Co. (NYSE: JPM)
JPMorgan will release third quarter results at approximately 7:00 a.m. ET on Tuesday, October 13, with a conference call at 8:30 a.m. ET. In the second quarter, the firm reported net income of $21.2 billion, or $7.70 per share, which included a $4.6 billion net gain on Visa shares; excluding significant items, net income was $16.9 billion, or $6.14 per share. Markets revenue rose 35% to $12.1 billion, with equity markets revenue up 86% to $6.0 billion, and investment banking fees rose 30% to $3.3 billion.
"Performance was strong across the Firm, and revenue in each line of business hit a new record," said Chairman and CEO Jamie Dimon at the time.
The Goldman Sachs Group, Inc. (NYSE: GS)
Goldman Sachs scheduled its third quarter 2026 results for approximately 7:30 a.m. ET on Tuesday, October 13, with a call at 9:30 a.m. ET. For the second quarter, the firm reported net revenues of $20.34 billion, up 39%, net earnings of $6.63 billion and diluted earnings per share of $20.98, with an annualized return on equity of 23.5%. Equities net revenues rose 72% to $7.42 billion and investment banking fees rose 55% to $3.40 billion.
Wells Fargo & Company (NYSE: WFC)
Wells Fargo reports third quarter results at approximately 7:00 a.m. ET on Tuesday, October 13, with a conference call at 10:00 a.m. ET. In the second quarter, the bank reported net income of $6.41 billion, up 17%, diluted earnings per share of $2.00, up 25%, and total revenue of $22.6 billion, up 9%. Net interest income rose 5% to $12.3 billion, and average loans rose 12% from a year earlier to $1.03 trillion.
"Continued expense discipline drove positive operating leverage," said CEO Charlie Scharf at the time.
Citigroup Inc. (NYSE: C)
Citi will issue third quarter results at about 8:00 a.m. ET on Tuesday, October 13, followed by a webcast at 11:00 a.m. ET. For the second quarter, Citi reported revenues of $24.8 billion, up 14%, net income of $5.8 billion, up 45%, and earnings per share of $3.15, compared with $1.96 a year earlier. Return on tangible common equity improved by 430 basis points to 13.0%.
"Our growing earnings generation will allow us to increase our planned dividend by 12%," said CEO Jane Fraser at the time.
Morgan Stanley (NYSE: MS)
Morgan Stanley will announce third quarter results at approximately 7:30 a.m. ET on Wednesday, October 14, with a call at 9:30 a.m. ET. In the second quarter, the firm reported record net revenues of $21.3 billion, net income of $5.6 billion and diluted earnings per share of $3.46, with a return on tangible common equity of 26.6%. Equity trading revenues reached a record $6.3 billion, and Wealth Management added $148.1 billion of net new assets.
"We continue to accrete capital, giving us incremental flexibility to invest in our core businesses," said Chairman and CEO Ted Pick at the time.
Track Earnings Week as It Happens
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