Major U.S. banks reported mixed third-quarter earnings this week, but the market response was overwhelmingly negative, with all six major bank stocks declining despite some positive results. CNBC's Jim Cramer noted that investors seem more focused on future economic uncertainties than on the banks' recent performance. "Frankly, it's strange to see such universally negative reactions to a set of quarters that contained plenty of positives," he said. "But this is what happens when investors are worried about the future, and it's hard not to worry with persistent inflation, rising interest rates, and newly wobbly capital markets."
Wells Fargo reported a mixed quarter, beating earnings estimates but missing on revenue. Its net interest margin stabilized at 2.43%, a positive after nine misses in the previous 10 quarters. Shares initially fell, but Cramer's Charitable Trust upgraded the stock to a buy-equivalent rating. Cramer highlighted CEO Charlie Scharf's confidence in the bank's performance in a higher interest rate environment. JPMorgan Chase missed expectations on both earnings and revenue, with weakness in fixed income trading and asset management. However, management provided better-than-expected net interest income forecasts for the fourth quarter and 2027, helping the stock recover some losses.
Citigroup stood out with strong revenue growth of 8% year over year, its best third-quarter performance in a decade. Despite exceeding fixed-income trading revenue expectations, shares tumbled 5.6%. Cramer suggested the stock was punished for its recent outperformance. Bank of America delivered disappointing results, missing revenue and earnings expectations and facing a $1.2 billion regulatory penalty. Shares fell roughly 5% following the report. Goldman Sachs reported strong numbers, beating estimates with a 21% rise in investment banking fees and a 72% surge in equities trading revenue. Yet, shares declined slightly, reflecting broader skepticism about the banking sector's future.
Morgan Stanley also topped expectations, with revenue in its Institutional Securities Group rising 18% and wealth management revenue growing 10%. CEO Ted Pick expressed cautious optimism about the fourth quarter. Despite solid results, shares fell almost 3%, reflecting investors' broader concerns about the banking sector.