Search Market News — WSJ, Bloomberg, NYT, FT, CNBC, Reuters, Yahoo Finance Archive
Loading analysis...
Loading Truth Social...
Loading live updates...
Bank stocks have fallen ahead of earnings this week from JPMorgan (JPM), Bank of America (BAC), Goldman Sachs (GS), and Wells Fargo (WFC), despite higher interest rates. Over the past month, those banks lost 6%, 13%, 12%, and 7%, respectively; the KBW Nasdaq Bank Index (^BKX) is down more than 14% from its August peak. Professionals cite concerns about technology-company valuations, weaker deal prospects, and technological disruption. Evercore ISI strategist Julian Emanuel said Oura’s delayed IPO and OpenAI’s offering being pushed to 2027 raised funding concerns, while AI-driven deposit competition and perceived threats to financial-sector margins weighed on sentiment.
Bloomberg-compiled forecasts suggest JPMorgan Chase, Goldman Sachs, Morgan Stanley, Citigroup and Bank of America will report $38 billion in third-quarter trading revenue next week, up 13% year on year but below the second quarter’s record $47 billion. Bankers attributed the slowdown to reduced Asian financing trades and weaker fixed income, currencies and commodities trading. Analysts expect a record third quarter nonetheless, with total profits of $44 billion, up almost 9% annually but down about 20% sequentially. Rising Treasury yields are expected to cause unrealised securities losses, affecting capital rather than profits. Concerns over data-centre financing, AI and interest rates have weighed on bank stocks.
Wall Street’s five biggest banks face scrutiny over rising rates after a highly profitable first half of 2026. JPMorgan Chase, Goldman Sachs and Citigroup report Tuesday; Bank of America and Morgan Stanley follow Wednesday. Bloomberg-compiled estimates forecast lower quarterly profits, though most should post year-over-year gains. The banks lost about $270 billion in market value from summer highs through Friday. Higher rates can boost lending income but increase funding costs and pressure bond portfolios and dealmaking. Executives signaled softer trading in September, while IPO postponements and slower third-quarter merger announcements raised concerns. Banks still see financing opportunities in AI infrastructure.
Banks’ precious metals businesses posted record first-half profits in 2026 and are projected to earn approximately $5 billion for the year, according to Crisil Coalition Greenwich. People familiar with the matter said JPMorgan earned about $700 million in the first half, while Deutsche Bank generated more than $200 million so far this year. Strong investor demand, price volatility and pricing gaps between trading hubs boosted earnings. Citigroup joined London’s bullion vaulting and clearing providers earlier this year; Deutsche Bank and Morgan Stanley are also seeking entry, according to sources and previous Bloomberg reporting. Heightened volatility also creates potential for larger losses.
Investors will examine US banks’ third-quarter results for effects of higher Treasury yields on deals, lending and funding costs. Earnings at the largest banks are expected to rise up to 20% year-on-year, although the KBW Bank Index fell 6% during the quarter. JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo report October 13; Morgan Stanley and Bank of America report October 14. Higher yields contributed to Oura and SB Energy postponing IPOs. JPMorgan expects investment banking fees and trading revenue to grow by mid-to-high teens percentages, while Bank of America expects investment banking fees to fall at least 10%. Analysts do not expect a repeat of securities-portfolio unrealized losses seen during the 2023 banking crisis.
U.S. equities fell on Wednesday as pressure continued to build in the bond market, pushing Treasury yields to levels not seen in more than two decades.
The Dow Jones Industrial Average lost 341.41 points, or 0.66%, to close at 51,179.87, while the S&P 500 shed 0.22% to end at 7,801.77. The Nasdaq Composite slipped 0.22% to settle at 27,538.69.
Investors were spooked by the benchmark 10-year Treasury note yield reaching its highest level since April 2002 at 5.365% on Wednesday. The 30-year bond yield also hit its highest level since May 2002 at 5.732%.
The 10-year yield later backed off its high of the day after an auction in which the Treasury sold $39 billion in 10-year notes. The move in the yield, which was last little changed, helped stocks pare their declines.
Bill Merz, head of capital markets research at U.S. Bank Asset Management, noted that the bid-to-cover ratio and indirect bidder participation were "quite strong."
"There's investor interest at these relatively elevated yield levels compared to what people have become used to in the last 15 to 20 years, but we need to take it with a grain of salt. There are a lot of other drivers out there that we need to take into consideration as well on a standalone basis," he said. "It was a solid auction."
Additionally, the minutes from the Federal Reserve's September meeting showed that officials anticipate raising rates before the end of the year, though there was no indication as to when that would be.
"With regard to the outlook for monetary policy beyond the current meeting, most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end," the minutes said. "Participants emphasized, however, that they approached each meeting with an open mind and decisions at future meetings would depend on incoming information and its implications for the outlook and the balance of risks."
The latest rise in yields impacted key areas of the market. Bank stocks, for instance, dropped as investors feared higher interest rates would hinder lending activity. Shares of Goldman Sachs moved down 1%, as did Bank of America. Others such as Wells Fargo, Citigroup and JPMorgan also closed lower on the day.
Technology stocks also came under pressure amid worries that higher borrowing costs would limit the artificial intelligence buildout. CrowdStrike shares were lower by almost 5%, while Palo Alto Networks and Meta Platforms lost more than 3% and 2%, respectively.
"With the level of rates where they are and the rise that we've seen, I think it's fair to characterize the fact that the margin for error has narrowed as it relates to earnings," Mike Dickson, head of research and quantitative strategies at Horizon Investments, said to CNBC, before adding that earnings could "still carry the market higher." He continued, "The level of yields seem very justified, but it doesn't make them irrelevant."
Even with the latest rise in yields, inflation expectations appear "very well anchored," Dickson said. "If the 10-year started rising because inflation expectations become unanchored, well now it can get a little bit out of control."
U.S. crude prices settled down 1.3% at $88.28 per barrel on Wednesday. International Brent crude futures, meanwhile, ended at $100.20 a barrel, down 0.4%.
The S&P 500 closed above 7,800 for the first time on Tuesday, led by gains in chipmakers.
AI assistants could help savers secure higher returns, potentially reducing banks’ profits from cheap deposits. Applying Mercer Capital’s typical 2–3 per cent valuation of core deposits to US banks’ $20 trillion in deposits, roughly 80 per cent core, suggests about $500 billion in equity value could be lost if these deposits earned market-like returns. Trust and other frictions make such extensive profit erosion unlikely. Banks could also benefit from AI: Bank of America chief Brian Moynihan said last month that $400 million in AI improvements generated $800 million in benefits. A late-September Truist survey found over half of bank investors viewed Federal Reserve rate hikes as the biggest valuation risk.
Global mergers and acquisitions slowed sharply in the third quarter, with US activity nearly halving to $535 billion, according to Mergermarket. Worldwide deal value remains on track for a record in 2026. Mergermarket’s Lucinda Guthrie attributed some slowdown to digestion of megadeals and summer vacations, while noting mounting obstacles. The Federal Reserve’s 25-basis-point rate increase and rising Treasury yields increased financing costs and pressured stocks. Major banks offered mixed investment-banking fee forecasts. Some analysts expect private equity exits to support mergers, but PwC’s Kevin Desai said elevated rates complicate midsize transactions and failed deals continue increasing despite stronger deal pipelines.
Bank stocks fell Thursday amid sharply higher interest rates. The KBW Nasdaq Bank Index (^BKX) dropped as much as 2.4% before narrowing its loss to 0.2%, and was down over 13% from its mid-August peak. Citigroup (C) and Bank of America (BAC) fell 1.9% and 1.3%. According to Truist Securities, financial stocks recorded their worst month relative to the S&P 500 since 1990. Mergermarket reported third-quarter global M&A deal value fell to about $1.23 trillion from $1.8 trillion in the second quarter. Oura postponed its IPO amid uncertain markets, while Jefferies Financial Group (JEF) earnings added evidence of softer third-quarter fixed-income trading at Wall Street banks.
Bank of America’s (BAC.N) Merrill Lynch agreed to a $39 million preliminary settlement, subject to court approval, over allegations that Merrill Edge retirement accounts earned 0.05%–0.14% on idle cash between December 15, 2016 and March 15, 2020, while other brokerages paid about 2%. Merrill Lynch denied wrongdoing. Separately, Manhattan federal judge Margaret Garnett ordered it to face most of a similar proposed class action covering retirement and non-retirement accounts. Customers may seek to prove it breached contractual obligations to provide a “reasonable rate” reflecting economic and business conditions. Merrill Lynch removed that provision in 2023 and 2024.
Wall Street’s biggest U.S. banks expect third-quarter trading revenue to fall short of their exceptionally strong second quarter, when stock-market debuts, deals and trading boosted profits. Executives cited softer fixed-income activity, although several expect results to exceed those of a year earlier. JPMorgan Chase projects markets revenue growth in the mid- to high-teens, while Citigroup expects mid-single-digit growth and Bank of America expects relatively flat trading revenue. Goldman Sachs said equities remained strong but fixed income, currencies and commodities were softer. Analysts polled by FactSet expect the five biggest Wall Street banks’ earnings per share to rise an average of 20% year over year. Third-quarter earnings reports are due the week of Oct. 12.
Jefferies Financial Group (JEF) reported third-quarter fixed-income trading fees down 26% year over year and 11% from the previous quarter for the period ending Aug. 31, missing analysts’ expectations before the bond sell-off intensified. Equities trading and dealmaking exceeded expectations. Investment banking fees rose 17% from the first quarter of last year to $1.3 billion, while equity underwriting revenue increased 68% year over year to $305 million. Shares fell modestly. Bank of America and Goldman Sachs executives also cited weaker fixed-income activity. Goldman Sachs (GS), JPMorgan Chase (JPM), and Citigroup (C) report third-quarter earnings Oct. 13.
Meta’s (META) new Muse AI agent has heightened concerns that automated cash management could move customers’ idle balances into higher-yielding alternatives, squeezing banks’ margins. The KBW Nasdaq Bank Index (^BKX) fell about 2.6% Tuesday before partially recovering. Muse can connect financial accounts, monitor balances, recommend changes, and act for users. Bank of America analyst Ebrahim Poonawala said the disruption remains conceptual until deposit costs rise beyond what rates or competition explain. Charles Schwab’s 2023 cash sorting required expensive funding and reduced profits. Citigroup, PNC, and Bank of America have introduced deposit incentives, while JPMorgan Chase has proposed Smart Cash.
Investors are increasingly focused on financial firms’ ability to attract and retain customer cash as higher interest rates, new technologies and competitors make depositors more yield-sensitive. Interest in Meta Platforms’ AI agent Muse intensified concerns that customers could easily shift money to higher-paying accounts, helping drive bank and brokerage shares lower. Banks also face rising deposit costs, competition from stablecoins and declining U.S. savings; the personal savings rate fell to 2.6% in April. Simon-Kucher projects customers without a single primary bank could rise from 12% to 20% by 2029. Financial firms are responding by emphasizing fees and higher-yielding products rather than relying on cheap customer cash.