Wall Street Banks Face Third-Quarter Earnings Test as Rising Rates Threaten First-Half Boom

Wall Street's biggest banks kick off third-quarter earnings on Tuesday with JPMorgan Chase ($JPM), Goldman Sachs ($GS) and Citigroup ($C), followed by Bank of America ($BAC) and Morgan Stanley ($MS) on Wednesday. They enter the period after one of their most profitable six-month runs in at least a decade, then interest rates surged.
Profits at these giants should fall from last quarter as revenues from trading, dealmaking and financing retreat, according to analyst estimates compiled by Bloomberg. Most are still expected to show profits rose from a year ago, with Bank of America and Morgan Stanley expected to be the exceptions.
Collectively, the five banks have shed about $270 billion in market value from their summer highs through Friday's close, even as the S&P 500 remains up roughly 14% this year. A Truist Securities survey found just 35% of institutional investors expect bank stocks to outperform the broader market, down from 68% in July and 82% in December.
Investors will also watch whether executives indicate that deposit and funding costs will pressure lending margins. The Federal Reserve raised its benchmark policy rate last month.