Goldman Sachs gave back nearly all of an early gain, JPMorgan traded in a $13 range and Wells Fargo slid about 2%. On their calls, Jamie Dimon said JPMorgan is tightening credit terms, and David Solomon said the 10-year Treasury yield does not scare him.
The numbers came out before the opening bell. The verdict on the first big bank reports of the season took most of the day, and by early afternoon it was a shrug.
Goldman Sachs rose more than 4% in early trading after reporting revenue that far exceeded forecasts. By about 1:45 p.m. Eastern it was up just 0.2% at $895.38.
JPMorgan Chase, which missed earnings forecasts but raised its outlook for net interest income, swung between a high of $344.36, up 3%, and a low of $331.19, down about 1%. It was trading near $333.91, roughly unchanged. Wells Fargo was down 1.9% at $81.71, consistent with its premarket direction.
The Financial Select Sector SPDR Fund slipped about 0.3%, and regional banks fared worse, with the SPDR S&P Regional Banking ETF down about 0.9%.
What executives said
The calls added caution to results that were mostly strong.
JPMorgan Chief Executive Jamie Dimon told analysts the bank is getting more selective about lending. "We're tightening up a little bit on credit," he said. "I think some of the credit terms have gotten a little bit loose ... We just don't feel like we have to chase that kind of stuff anymore." In the earnings release he had listed fiscal deficits, sticky inflation, elevated asset prices, rising rates and geopolitics as forces that "may be manageable, but we remain prepared for a wide range of outcomes."
Mr. Dimon also said JPMorgan won't, for now, let just any outside AI agent inside the company, because "that's just too risky for clients and for JPMorgan."
Goldman Chief Executive David Solomon struck a different note on rates. The 10-year Treasury yield, which hit a 24-year high last week, "doesn't scare me in terms of an operating environment," he said, adding that abrupt moves in rates are what cause trouble for markets. He called himself bullish on a technology supercycle driven by AI, while saying Goldman is "highly selective about the risk we underwrite and the capital we commit."
Mr. Solomon also said "there is no succession transition or timeline under way" at the bank.
The trading slowdown
The common thread in the results was a cooling from a very strong second quarter. Trading revenue fell from the second quarter at all four big banks that reported. Against a year earlier, fixed income lagged equities at each. Citigroup's markets revenue fell 13% from the second quarter, Goldman's combined trading revenue about 17%, and JPMorgan's about 15%.
Market implications
One reading is that the fade reflects expectations, not results. Shares had moved up into the reports, the numbers were broadly solid and executives described a healthy consumer, so a flat day after a strong morning may simply be profit-taking.
A second reading is that investors are listening to the warnings. Tighter credit terms at the largest lender, a slowdown in trading from the second quarter and repeated references to risk discipline suggest bank executives see a less forgiving second half.
What to watch
Wednesday brings results from Bank of America and Morgan Stanley on the same morning as the inflation data, and regional lenders start reporting Friday.
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