Wall Street is tiptoeing past a sleeping dog. Bank earnings season starts Tuesday, and the S&P 500 is sitting near record highs. Stock futures barely moved Monday morning, which is what traders do when the real news is a day away.
Here is the setup. As of about 8 a.m. ET, Yahoo Finance showed S&P 500 futures up roughly 0.07%. Dow futures gained about 0.15%, while Nasdaq futures slipped about 0.19%. CNBC described the moves as little changed to slightly higher. So “futures rise” is technically true, but it is a whisper, not a shout.
Why the Bank Earnings Matter This Week
The big banks go first every quarter, and that is not an accident. Their reports offer a window into the health of the broader economy. Banks see consumer spending, loan demand and corporate borrowing before almost anyone else.
JPMorgan Chase and Wells Fargo both report around 7 a.m. ET on Tuesday, Oct. 13. JPMorgan’s call follows at 8:30 a.m., per the company’s announcement. Wells Fargo’s call is at 10 a.m., according to the Wells Fargo newsroom. Goldman Sachs and Citigroup are also expected Tuesday. Morgan Stanley and Bank of America follow Wednesday, based on Investing.com’s preview.
Analysts surveyed by AlphaStreet expect JPMorgan to post earnings of $5.93 per share on about $51.19 billion in revenue. That bar is high. Last quarter, the bank earned $7.70 per share.
But a one-time gain from selling Visa shares boosted that figure, so the comparison is tricky. (Apples to apples, this is not.)
Banks are also profiting from the money that hedge funds borrow, as our look at hedge fund borrowing on Wall Street explains. Those quarterly results could show how much.
A Market Riding High on Tech
The mood going in is good. The S&P 500 closed Friday at 7,811.54, up 0.59%. The Nasdaq Composite finished at 27,366.17, and the Dow added 423 points to 51,654.95. Both the S&P 500 and Nasdaq hit record highs last week.
The S&P is up about 13.5% this year, and the bull market turned four years old on Monday. The Nasdaq has now notched four straight weekly gains. Tech has done most of the heavy lifting, and investors have mostly shrugged off higher oil prices and yields.
Meanwhile, the 10-year Treasury yield sits near 5.24%. Money is not cheap. It is exactly why investors will listen closely to what executives say about borrowing costs and fuel prices during the Q3 earnings season.
Some also worry about an AI bubble, and the market’s gains lean heavily on a handful of tech names.
Rising yields and oil have rattled stocks before, as the last slide in Treasury yields and oil showed.
Here’s the Thing About a 29.6% Forecast
FactSet’s John Butters says S&P 500 companies are expected to grow earnings 29.6% this quarter. That would be the fourth straight quarter above 25%, powered largely by the AI data center buildout.
Here’s the thing: those are huge numbers, and they leave the market very little room for “fine.” When expectations are this lofty, a merely good report can read like a miss, even for bank quarterly results. If you own an index fund, you have a rooting interest.
The week does not stop at banks. Johnson & Johnson and UnitedHealth report Tuesday. BlackRock and ASML follow on Wednesday, and TSMC reports Thursday, which gives investors a fresh read on AI-chip demand. The tech giants will not report for several more weeks.
So the question for Tuesday morning is simple. Do the banks confirm that consumers and companies are still spending? Or do their bank earnings reports hint that the party is more fragile than the record highs suggest?
