JPMorgan, Goldman Sachs, Citigroup and Wells Fargo Post Strong Profits but Warn of Rate and Inflation Risks
Wall Street's largest banks reported higher third-quarter profits, driven by consumer spending and AI investment, but cautioned that rising interest rates and sticky inflation could weigh on the economy.
Wall Street's largest banks reported higher third-quarter profits, fueled by resilient consumer spending and heavy business investment in artificial intelligence, but their leaders warned that rising interest rates and persistent inflation could eventually take a toll on the U.S. economy.
JPMorgan Chase, Citigroup, Wells Fargo, and Goldman Sachs all posted year-over-year profit gains. JPMorgan earned $15.3 billion, or $5.57 per share, up from $14.4 billion, or $5.07 per share, a year earlier. The result missed analyst expectations of $5.93 per share, marking the bank's first earnings miss in nearly three years. The shortfall stemmed from a slowdown in fixed-income trading activity compared with both the summer and the prior year. Despite the miss, JPMorgan shares rose 0.8% in early trading.
«The U.S. economy continued to be fueled by strong business investment and ongoing consumer spending,» CEO Jamie Dimon said in a statement. «However, large fiscal deficits, sticky inflation, elevated asset prices, rising interest rates and geopolitical conditions continue to shift under the surface.»
Goldman Sachs reported a profit of $5.29 billion, or $17.01 per share, up sharply from $4.1 billion, or $12.25 per share, a year earlier. The increase was driven by a surge in stock-trading revenue, though bond trading also slowed. Goldman shares climbed 1.9%. The bond market experienced significant volatility over the summer as investors grew increasingly concerned about government spending and inflation. Yields on 10-year and 30-year Treasurys rose to levels not seen in years.
Citigroup said its third-quarter profits jumped 40% from a year ago, beating Wall Street expectations. The bank posted higher revenue from investment banking and wealth management, while profits in its credit card division were flat. Citi shares dipped 0.7%.
Wells Fargo reported a profit of $5.95 billion, or $1.87 per share, beating forecasts. The San Francisco-based bank has seen profits climb steadily in recent quarters after federal regulators removed an asset cap that had been imposed for several years following a sales practices scandal nearly a decade ago. Wells Fargo shares dropped 1.5%.
The big banks typically kick off the quarterly earnings season, and this one is particularly important for the stock market. Robust corporate profits have helped propel the S&P 500 to record levels. Analysts expect companies in the index to deliver overall earnings-per-share growth of nearly 30% from a year earlier, according to FactSet. If correct, it would mark the third consecutive quarter of growth exceeding 25%.
Higher diesel, technology, and food prices gave the Federal Reserve reason to raise interest rates last month, despite pressure from the White House to hold off. The banks' warnings underscore the delicate balance facing the economy as consumers continue to pay their bills and businesses invest in AI, even as borrowing costs rise and inflation remains stubborn.
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