U.S. banks and tech stocks weigh on equities as earnings and inflation data steer markets

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Banks & tech stocks weigh on equities

Highlights

JPMorgan, Goldman Sachs, Wells Fargo and Citigroup post mixed Q3 results, with Goldman reporting 72% growth in trading revenue while JPMorgan misses estimates due to a $65 million securities loss.
Dow Jones falls 0.35%, Nasdaq loses 0.15%, S&P 500 closes near flat as China’s new chip tech hits global tech stocks and South Korea’s Kospi slides 5.5%.
Delta Air Lines lowers full-year guidance after Q3 fuel costs rise 62% to $4.1 billion, while Wall Street eyes CPI data forecasted at 3.6% headline and 2.4% core ahead of the Oct. 27 FOMC meeting.

Bank earnings and sector moves set the tone

As reported by Cboe Global Markets, trading remains range-bound even as earnings from JPMorgan Chase, Goldman Sachs, Wells Fargo and Citigroup offer a mixed read on the U.S. economy.

Results suggest consumer and corporate spending is still stable, but executives are warning that elevated interest rates are starting to strain housing and mortgages. JPMorgan Chief Executive Jamie Dimon says large fiscal deficits, sticky inflation, elevated asset prices, rising interest rates and geopolitical conditions continue to shift under the surface.

Goldman Sachs beats Wall Street estimates on profit, revenue and equities trading, with trading revenue rising 72%. JPMorgan misses on sales and earnings after a $65 million loss on investment securities, although it projects higher net interest income as rates stay elevated. Wells Fargo beats on profit but misses on revenue and net interest income, while Citigroup tops expectations on profit and revenue and raises its full-year net interest income guidance.

Bank of America and Morgan Stanley are due to report on Wednesday. Bank of America shares fall after the bell after the Treasury Department imposes a $1.21 billion penalty tied to anti-money laundering and sanctions violations that the bank admits, while Morgan Stanley also ends the session lower.

Tech weakness, airline costs and CPI in focus

Broader market moves remain limited, with the Dow Jones Industrial Average closing down 0.35%, the Nasdaq Composite losing 0.15% and the S&P 500 Index finishing near flat. Technology shares are under pressure after China advances a proprietary chip structure that sends South Korea's Kospi benchmark down 5.5%, feeding through to U.S. names including Micron, Western Digital and Sandisk.

Some megacap stocks still outperform. Apple reaches a record high as it moves toward a $5 trillion market capitalization, while Nvidia closes another 1% higher and retains a market value of $5.51 trillion.

Outside tech and banking, airline stocks are selling off as jet fuel costs surge despite firm revenue trends. Delta Air Lines recently cuts its full-year earnings projections after third-quarter fuel costs jump 62% to $4.1 billion, and analysts are lowering earnings forecasts and price targets for other carriers ahead of upcoming reports.

Attention is now turning to inflation data due tomorrow. Wall Street expects headline CPI to rise 3.6% year over year, up from 3.4% in August, while core CPI is seen holding at 2.4%; the figures are likely to be a key input before the Federal Open Market Committee begins its two-day meeting on Oct. 27.

In our earlier article on major Wall Street banks’ third-quarter earnings and the valuation gap, we noted that profit growth at firms like JPMorgan, Goldman Sachs and Citigroup was supported by strong equity trading, yet investors still priced the sector as if future earnings growth could be limited. We also highlighted how rising AI-related competition and spending—alongside concerns about deposit retention—could weigh on near-term profitability even if core operations remain resilient.

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