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The market liked what it saw in the quarterly releases from JPMorgan (JPM - Free Report) and Wells Fargo (WFC - Free Report) , even though Wells Fargo came up short on the top-line while JPMorgan beat both top- and bottom-line expectations.
Even more important than the two banks’ Q3 EPS and revenue surprises is their favorable commentary on business trends and the economy's overall health. Questions about the economy’s outlook have been front and center for the market lately, with some in the market fearing that the Fed may have delayed the onset of its easing cycle.
The JPMorgan and Wells Fargo reports and management commentaries are reassuring on this count as they see a stable and positive spending environment, notwithstanding some stress at the lower end of the income distribution.
While taking nothing away from the banks’ positive results, part of the contributing factor to the market’s favorable reaction is the reassuring read-through about the macro backdrop. This is a net positive for JPMorgan and Wells Fargo shares, which had lost ground lately. The chart below shows the year-to-date performance of JPMorgan and Wells Fargo shares relative to the market.
Image Source: Zacks Investment Research
JPMorgan’s Q3 earnings were -1.9% below the year-earlier level on +7% higher revenues. The bank beat EPS and revenue estimates on better-than-expected net interest earnings and also provided positive guidance on this front for the current period. The company had warned recently of elevated net interest earnings expectations for next year, which had weighed on the stock since then. They reiterated that view after the Q3 earnings release, but the market appears to be discounting that outlook following the positive Q3 results.
In the core banking business, profitability remains constrained by margin pressures, cyclically soft demand for credit, and some deterioration in credit quality, albeit from a shallow level. On the capital markets side, trading revenues remain strong, and the investment banking business has started showing signs of growth but remains below the strong level two years ago.
There has been talk of ‘green shoots’ concerning deal pipelines, which many hope will translate into actual activities in the post-election phase now that the Fed has initiated the easing cycle. JPMorgan’s investment banking fees increased more than +29% in Q3, with strong activities on the debt capital markets side.
The positive results from JPMorgan and Wells Fargo provide a positive read-through for the coming reports from Bank of America, Goldman Sachs, and others.
Regarding the Q3 earnings season scorecard for the Finance sector, we now have results from 15.6% of the sector’s market capitalization in the S&P 500 index. Total earnings for these Finance companies are down -0.1% from the same period last year on +4.7% higher revenues, with all the companies beating EPS estimates and 75% beating revenue estimates.
Looking at the Finance sector as a whole, total Q3 earnings for the sector are expected to be up +4.7% on +5% higher revenues.
The chart below shows the sector’s Q3 earnings and revenue growth expectations in the context of what we saw from the sector in the last two periods and what is expected in the following three quarters.
Image Source: Zacks Investment Research
Q3 Earnings Season Scorecard
Including the aforementioned JPMorgan and Wells Fargo reports, we now have Q3 results for 29 S&P 500 members. Total earnings for these 29 index members that have already reported results are up +7.1% from the same period last year on +2.8% higher revenues, with 72.4% beating EPS estimates and 65.5% beating revenue estimates.
The Q3 reporting cycle ramps up this week, with over 100 companies on deck to report results, including 40 S&P 500 members. Banks, brokers, and other Finance sector players dominate this week’s reporting docket, but we do have a fair amount of representation from other sectors, including Proctor & Gamble, Netflix, Johnson & Johnson, Schlumberger, CSX Corp., United Airlines, and others.
The comparison charts below put the Q3 earnings and revenue growth rates for the 29 index members that have reported results in a historical context.
Image Source: Zacks Investment Research
The comparison charts below put the Q3 EPS and revenue beats percentages in a historical context.
Image Source: Zacks Investment Research
It is premature to identify any trends at this very early stage. Still, the favorable comparison of the revenue beats percentage will be significant if it endures through the rest of the Q3 reporting cycle.
The Earnings Big Picture
Looking at Q3 as a whole, combining results from the companies that have reported already with estimates for the still-to-come companies, total earnings for the S&P 500 index are expected to be up +3.6% from the same period last year on +4.5% higher revenues. This would follow the +10.2% earnings growth for the index in the preceding period on +5.5% higher revenues.
The chart below shows the Q3 earnings and revenue growth expectations in the context of what we saw in actual results over the preceding four quarters and what is expected over the following three quarters.
Image Source: Zacks Investment Research
Notwithstanding the modest growth pace in Q3, the aggregate earnings total for the period is expected to be a new all-time quarterly record, as the chart below shows
Image Source: Zacks Investment Research
The chart below shows the overall earnings picture on a calendar-year basis, with the +7.7% earnings growth this year followed by double-digit gains in 2025 and 2026.
Image Source: Zacks Investment Research
Please note that this year’s +7.7% earnings growth improves to +9.6% on an ex-Energy basis.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>> A Detailed Analysis of Q3 Earnings Expectations
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The Q3 Earnings Season Kicks Off Positively
The market liked what it saw in the quarterly releases from JPMorgan (JPM - Free Report) and Wells Fargo (WFC - Free Report) , even though Wells Fargo came up short on the top-line while JPMorgan beat both top- and bottom-line expectations.
Even more important than the two banks’ Q3 EPS and revenue surprises is their favorable commentary on business trends and the economy's overall health. Questions about the economy’s outlook have been front and center for the market lately, with some in the market fearing that the Fed may have delayed the onset of its easing cycle.
The JPMorgan and Wells Fargo reports and management commentaries are reassuring on this count as they see a stable and positive spending environment, notwithstanding some stress at the lower end of the income distribution.
While taking nothing away from the banks’ positive results, part of the contributing factor to the market’s favorable reaction is the reassuring read-through about the macro backdrop. This is a net positive for JPMorgan and Wells Fargo shares, which had lost ground lately. The chart below shows the year-to-date performance of JPMorgan and Wells Fargo shares relative to the market.
Image Source: Zacks Investment Research
JPMorgan’s Q3 earnings were -1.9% below the year-earlier level on +7% higher revenues. The bank beat EPS and revenue estimates on better-than-expected net interest earnings and also provided positive guidance on this front for the current period. The company had warned recently of elevated net interest earnings expectations for next year, which had weighed on the stock since then. They reiterated that view after the Q3 earnings release, but the market appears to be discounting that outlook following the positive Q3 results.
In the core banking business, profitability remains constrained by margin pressures, cyclically soft demand for credit, and some deterioration in credit quality, albeit from a shallow level. On the capital markets side, trading revenues remain strong, and the investment banking business has started showing signs of growth but remains below the strong level two years ago.
There has been talk of ‘green shoots’ concerning deal pipelines, which many hope will translate into actual activities in the post-election phase now that the Fed has initiated the easing cycle. JPMorgan’s investment banking fees increased more than +29% in Q3, with strong activities on the debt capital markets side.
The positive results from JPMorgan and Wells Fargo provide a positive read-through for the coming reports from Bank of America, Goldman Sachs, and others.
Regarding the Q3 earnings season scorecard for the Finance sector, we now have results from 15.6% of the sector’s market capitalization in the S&P 500 index. Total earnings for these Finance companies are down -0.1% from the same period last year on +4.7% higher revenues, with all the companies beating EPS estimates and 75% beating revenue estimates.
Looking at the Finance sector as a whole, total Q3 earnings for the sector are expected to be up +4.7% on +5% higher revenues.
The chart below shows the sector’s Q3 earnings and revenue growth expectations in the context of what we saw from the sector in the last two periods and what is expected in the following three quarters.
Image Source: Zacks Investment Research
Q3 Earnings Season Scorecard
Including the aforementioned JPMorgan and Wells Fargo reports, we now have Q3 results for 29 S&P 500 members. Total earnings for these 29 index members that have already reported results are up +7.1% from the same period last year on +2.8% higher revenues, with 72.4% beating EPS estimates and 65.5% beating revenue estimates.
The Q3 reporting cycle ramps up this week, with over 100 companies on deck to report results, including 40 S&P 500 members. Banks, brokers, and other Finance sector players dominate this week’s reporting docket, but we do have a fair amount of representation from other sectors, including Proctor & Gamble, Netflix, Johnson & Johnson, Schlumberger, CSX Corp., United Airlines, and others.
The comparison charts below put the Q3 earnings and revenue growth rates for the 29 index members that have reported results in a historical context.
Image Source: Zacks Investment Research
The comparison charts below put the Q3 EPS and revenue beats percentages in a historical context.
Image Source: Zacks Investment Research
It is premature to identify any trends at this very early stage. Still, the favorable comparison of the revenue beats percentage will be significant if it endures through the rest of the Q3 reporting cycle.
The Earnings Big Picture
Looking at Q3 as a whole, combining results from the companies that have reported already with estimates for the still-to-come companies, total earnings for the S&P 500 index are expected to be up +3.6% from the same period last year on +4.5% higher revenues. This would follow the +10.2% earnings growth for the index in the preceding period on +5.5% higher revenues.
The chart below shows the Q3 earnings and revenue growth expectations in the context of what we saw in actual results over the preceding four quarters and what is expected over the following three quarters.
Image Source: Zacks Investment Research
Notwithstanding the modest growth pace in Q3, the aggregate earnings total for the period is expected to be a new all-time quarterly record, as the chart below shows
Image Source: Zacks Investment Research
The chart below shows the overall earnings picture on a calendar-year basis, with the +7.7% earnings growth this year followed by double-digit gains in 2025 and 2026.
Image Source: Zacks Investment Research
Please note that this year’s +7.7% earnings growth improves to +9.6% on an ex-Energy basis.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>> A Detailed Analysis of Q3 Earnings Expectations