Wall Street Braces for Q3 Earnings: JPMorgan, Goldman, BofA and More Set to Report

By Michael Bloom and Deena Zaidi | October 10, 2023

The titans of Wall Street are gearing up to release their third-quarter earnings reports this week, an event that will set the tone for the broader financial market. Major players like JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo are scheduled to unveil their results on Tuesday, followed by Morgan Stanley and Bank of America on Wednesday. This wave of earnings announcements comes at a critical juncture for the markets, which have seen the S&P 500 reach new heights yet remain volatile due to rising Treasury yields and elevated oil prices. These factors have fueled concerns about potential further interest rate hikes by the Federal Reserve to combat inflation.

Tuesday's Key Bank Reports

JPMorgan Chase (JPM)

JPMorgan Chase is expected to report double-digit earnings growth compared to the previous year. Analysts at Seaport Research Partners expressed a cautious outlook, noting that while net interest income forecasts are strong, expenses might also be guided higher. Historically, JPMorgan has a strong track record of exceeding earnings estimates, surpassing them 82% of the time, according to Bespoke Investment Group. However, the stock has seen declines after four of its last five earnings releases.

Goldman Sachs (GS)

Goldman Sachs is projected to see a 10% increase in its top line and around a 6% rise in its bottom line, according to LSEG data. TD Cowen recently initiated coverage with a 'buy' rating, highlighting Goldman's leverage of its scale to benefit from favorable market conditions. Goldman has a remarkable streak of topping earnings expectations for 12 consecutive quarters, and its stock rallied 9% after its last report.

Citigroup (C)

Citigroup is anticipated to report significant year-on-year earnings growth. Jefferies analyst David Chiaverini views Citigroup favorably, citing its improving return profile driven by broad-based revenue growth, disciplined expenses, and increasing capital returns. Despite this positive outlook, Citigroup's stock has faced headwinds on earnings days, dropping after two of its last three releases.

Wells Fargo (WFC)

Wells Fargo is forecast to post earnings growth of over 10%. The bank's shares have experienced a 13% decline over the past month, making it the worst performer among six major U.S. banks. The upcoming report will be closely watched to see if it can spur a recovery. Wells Fargo has consistently beaten earnings expectations for 10 straight quarters, but its stock has fallen after seven of those releases.

Wednesday's Focus

Morgan Stanley (MS)

Morgan Stanley's top line is expected to grow nearly 10%. Analysts anticipate a sharp decrease in trading revenue from the second quarter, but with improvements in the franchise. Investment banking forecasts have been revised downward due to fewer transactions moving to revenue realization. Despite potential headwinds, Morgan Stanley's stock has risen after its last four earnings reports.

Bank of America (BAC)

Bank of America is projected to achieve single-digit year-on-year growth in both earnings and revenue. While net interest income is expected to rise, wealth management fees should remain strong, trading and investment banking fees might lag behind peers. Bank of America has a history of exceeding earnings estimates 81% of the time, and its stock has risen after the last two earnings announcements, despite an average decline on earnings days.

Overall, 25 S&P 500 companies are slated to release their quarterly figures this week, making these bank earnings a crucial indicator for the market's trajectory.