Wall Street Banks Kick Off Earnings Season on a High Note

Wall Street’s biggest banks are heading into earnings season with strong momentum. Analysts expect profits across six major lenders to rise about 6% compared to last year’s third quarter, according to Bloomberg data.

The upbeat expectations will face their first test on Tuesday, when JPMorgan Chase (JPM), Citigroup (C), Goldman Sachs (GS), and Wells Fargo (WFC) open the reporting season. Bank of America (BAC) and Morgan Stanley (MS) follow on Wednesday.

Revenue from core lending, trading, and dealmaking is expected to climb for most of these firms. For all but Wells Fargo, investment banking and trading are projected to grow for a seventh straight quarter. “It’s been a good environment,” said Barclays analyst Jason Goldberg. “Markets are at all-time highs, and there’s been plenty of activity with interest rates, currencies, and geopolitics all moving.”

Stocks Rally as Business Picks Up

Shares of major Wall Street banks have been on a tear this year. Citigroup, Goldman Sachs, JPMorgan, and Morgan Stanley have all gained between 23% and 40% through October 10, outpacing the S&P 500 by at least nine percentage points. Wells Fargo and Bank of America have performed roughly in line with the index.

The rebound comes after a slower start to the year when new tariffs froze dealmaking and corporate borrowing. Now, global M&A volume has surged past $1 trillion, while IPOs, corporate debt issuance, and syndicated lending are also on the rise, Dealogic data shows.

At a recent Barclays conference, top executives sounded confident about the strength of the U.S. economy and client activity. “We’ve got a lot of rich dialogue with clients around the globe as they think about how to manage through tariff outcomes,” said Citigroup CFO Mark Mason.

Capital One CEO Richard Fairbank added, “The consumer remains an anchor of strength in our economy.” Rising expenses, including higher compensation costs, are being viewed as a healthy sign of business expansion. “We call them good expenses,” said JPMorgan investment banking co-head Doug Petno.

Risks Still Lurk

Despite the strong results, some executives are cautious. JPMorgan’s representatives warned that markets could face a correction within the next two years.

Other worries include trade tensions, tax policy, and the ongoing U.S. government shutdown, which could disrupt data releases, consumer spending, and IPO approvals if it continues.

Recent bankruptcies in the auto industry have also drawn attention to risks in credit markets. Dallas-based Tricolor and Cleveland-based First Brands both filed for bankruptcy, sparking questions about investor exposure to high-yield debt and opaque lending structures.

Jefferies Financial Group, which reported $715 million in exposure to First Brands through its asset management arm, has seen its stock fall 20% since the news broke. “Loans to funds and non-bank financial firms have been growing fast,” said Chris Whalen, chair of Whalen Global Advisors. “That’s the big worry you hear in Washington. So far, credit is okay, but investors are watching closely.” Earnings Calendar (Week 42) >>