Tuesday brings the first big batch of Wall Street's third-quarter results. JPMorgan and Goldman Sachs publish before the opening bell, with Citigroup and Wells Fargo reporting alongside them. Morgan Stanley and Bank of America publish a day later on October 14. Analysts expect the largest lenders to lift profits by up to 20% from a year earlier. Investment banking and trading revenue should land well above the same period last year, with credit quality holding steady.

The reports land after a brutal repricing. The five largest banks have seen roughly $270 billion of market value disappear since their summer highs as of the October 9 close. The KBW Bank Index trades 13% below its August peak after sliding 6% across the quarter. Rising profit forecasts against falling share prices — that gap makes this earnings week unusually high-stakes.

The central question is straightforward: can the profits survive the bond selloff? Bank executives already warned in September that trading was cooling from an unusually strong first half.

The yield spike is the thread running through every earnings call. Reuters reports that investors are watching for signs the Treasury selloff curbs dealmaking and lending growth while pushing funding costs higher. Bank of America has already flagged a possible 10%+ fall in third-quarter investment banking fees, with sales and trading revenue roughly flat. JPMorgan takes the opposite view. It guides to mid-to-high-teens percentage gains across both its investment banking and trading businesses. Goldman's David Solomon expects a quieter quarter, with soft fixed-income, currencies and commodities results partly balanced by a strong equities desk.

Bloomberg estimates released October 9 put the five biggest banks' combined stock-trading revenue at close to $19 billion for the quarter. Goldman leads at about $5.1 billion; Morgan Stanley is close behind at $4.9 billion. Yet roughly $38.9 billion in combined markets revenue would mean only 17% annual growth — a sharp step down from about 30% in the second quarter.

Why it matters

This earnings season is the first real test of whether the sector's exceptional first half — one of its most profitable in at least a decade — can withstand borrowing costs at multidecade highs. Rising rates cut two ways. They raise the yield on new loans, cushioning net interest income while deposit costs lag. They also lift funding costs, shrink bond portfolio values and discourage corporate borrowing. That tension is why analysts are splitting the sector. Commercial banks are in favor for their healthy capital bases, limited credit worries and a tailwind from rising rates. Capital-markets names like Goldman and Morgan Stanley face skepticism over elevated valuations and volatile deal flow. The deals outlook is already under pressure — Firmus scrapped its $5B IPO as listing delays spread. The macro backdrop is firmly hawkish: the Federal Reserve raised rates in September, and markets now price another hike before year-end.

What to watch

  • Deposit costs and loan growth — Angel Oak's Cheryl Pate says investors want reassurance that deposit costs are contained and no major deposit flight is under way.
  • The capital-markets pipeline — UBS analyst Erika Najarian wants reassurance that deal activity and loan growth stay on track.
  • FICC versus equities — whether fixed-income weakness deepens into Q4 or stabilizes near the current pace.
  • Wealth management as an offset — Bloomberg Intelligence flags it as one bright spot entering the quarter.
  • The regionals later in the week — State Street, Citizens Financial and JPMorgan are expected to post the strongest year-over-year growth.

MarketRadar take

The numbers describe a sector priced for trouble that is not yet showing up in the results. If deposit costs stay contained and trading revenue holds near $19 billion, the 13% index drawdown looks like a valuation reset rather than a warning — with commercial-heavy banks first in line for the recovery. If management guidance turns cautious on loan growth or flags new pressure from AI-linked financing exposure, the selloff has further to run. Beat-or-miss headlines will move individual stocks this week. The pipeline language on the calls will move the sector.