Wall Street Banks Face Rate Test as Q3 Earnings Season Opens

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Summary · why it matters

Wall Street's biggest banks are heading into third quarter earnings after one of their most profitable six-month runs in at least a decade, but sharply rising interest rates now threaten that boom. JPMorgan Chase, Goldman Sachs, and Citigroup report on Tuesday, followed by Bank of America and Morgan Stanley on Wednesday, with investors hunting for clues on whether higher rates are beginning to spoil the first-half surge. Profits at these giants are expected to fall from last quarter as trading, dealmaking, and financing revenues retreat from the standout second quarter levels, according to analyst estimates compiled by Bloomberg, though most are still expected to show profits up from a year ago, with Bank of America and Morgan Stanley the exceptions. Collectively, the five banks have shed about $270 billion in market value from their respective summer highs through Friday's close, even as the S&P 500 remains up roughly 14% this year, and a Truist Securities survey earlier this month found just 35% of institutional investors expect bank stocks to outperform the broader market, down from 68% in July and 82% in December. The key focus is less on what higher borrowing costs mean for third quarter profits than on whether the rapid repricing of money will undermine the unusually strong activity that defined 2026's first half, with trading results expected to bring the most immediate evidence of a slowdown after bank executives telegraphed softer September activity, particularly in fixed income. Higher financing costs also raise the stakes for whether this year's investment banking surge can continue into 2027, as several companies including smart ring maker Oura have postponed public listings and Nvidia-backed Firmus Grid abruptly shelved its listing plans this week after investors balked at its proposed valuation, while global merger and acquisition deal announcements slowed sharply during the third quarter.

Impact on assets 8

Financials▼
Bank of America Corp
BAC
▼ NegativeCapitalrelevance

Bank of America is one of the five banks expected to report lower Q3 profits and is an exception to year-over-year profit growth, with trading and financing revenues retreating.

Goldman Sachs Group Inc
GS
▼ NegativeCapitalrelevance

Goldman Sachs reports Tuesday with profits expected to fall from last quarter as trading and dealmaking revenues retreat from standout Q2 levels.

Morgan Stanley
MS
▼ NegativeCapitalrelevance

Morgan Stanley reports Wednesday and is one of the exceptions expected to show profits down from a year ago, with dealmaking and financing activity at risk.

Digital Finance & Tokenization▼
Citigroup Inc.
C
▼ NegativeCapitalrelevance

Citigroup reports Tuesday amid expectations that higher rates are spoiling the first-half profit surge, with trading, dealmaking, and financing revenues retreating.

JPMorgan Chase & Co
JPM
▼ NegativeCapitalrelevance

JPMorgan reports Tuesday as sharply rising rates threaten the bank's most profitable six-month run in a decade, with trading and financing revenues expected to decline.

Artificial Intelligence▲
Others▲

Off-coverage companies 1

Firmus Gridi
Private± Mixedrelevance