Wall Street Banks Q3 Earnings: Dealmaking Stalls as Profits Rise

Record profits, falling stocks

The six largest U.S. banks made more money in the third quarter of 2026 than a year earlier. Their stocks still fell. The cause is not a collapse in profits. Investors are pricing in a slowdown in capital markets combined with a Federal Reserve that has started raising rates again, and that pairing could make 2026's strong first half hard to repeat.

Reuters summarized the week's results by saying that even the biggest and sturdiest firms are exposed to swings in capital markets. In its account, third-quarter dealmaking was hurt by rising bond yields, an unstable AI trade and geopolitical worries, which pushed back a long-expected recovery in mergers and IPOs once more22. JPMorgan Chase missed profit expectations for the first time since the fourth quarter of 2023, according to LSEG data, and Bank of America also came in below forecasts22. The other four beat estimates. Their shares fell or barely moved because investors thought the beats were smaller than in earlier quarters26.

The numbers: a large aggregate and a split scorecard

Added together, the totals are large. One tally puts combined third-quarter profit for the six banks at about $43.5 billion on roughly $165 billion of revenue, with all six reporting on October 13 or 146. The Financial Times noted that profit at JPMorgan rose 6%, at Goldman Sachs 29% and at Citigroup 17% from a year earlier3. Those figures fit a reading in which bank profits are rising but no longer surprising anyone.

The gap against expectations is where the banks separated. One comparison of earnings per share against consensus puts Goldman about 32% above estimates, Citigroup 7.1% above, Morgan Stanley 3.4% and Wells Fargo 1.1%. Bank of America was 1.8% below and JPMorgan 3.0% below4.

JPMorgan's miss was the main story of the week. The bank earned $15.31 billion, or $5.57 a share. Without $658 million of net securities losses it would have earned $5.75, still short of the $5.90 LSEG consensus1. The bank had beaten EPS estimates in 16 of the previous 20 quarters1. Managed revenue was $50.91 billion, below the $51.22 billion expected1. Reports differ a little on the size of the miss because consensus figures and revenue definitions vary. One account compared the $5.75 adjusted figure with a $5.93 estimate and set reported revenue of $50.17 billion against a $51.23 billion forecast2. Either way, the bank missed on both lines.

Bank of America's shortfall was partly self-inflicted. A $1.2 billion charge that cannot be deducted for tax, tied to regulatory penalties over money-laundering and sanctions violations, took 17 cents off EPS and contributed to a 17% fall in net income. Revenue of almost $30 billion missed consensus, and trading was weaker than expected10.

Wells Fargo's result was mixed. It beat on profit, but net interest income and revenue missed22. Revenue was $21.87 billion against a consensus of $22.31 billion, the third revenue miss in four quarters28.

Equities carried the quarter, fixed income stalled

The clearest pattern across the results was a split inside trading. Reuters reported that equity desks gained from heavy market activity while fixed income lagged22. Year-over-year equities trading growth was 72% at Goldman, 49% at JPMorgan, 41% at Morgan Stanley, 14% at Citi and 11% at Bank of America. Fixed income was flat or down at almost every bank6.

That explains why Goldman and JPMorgan, often treated as close rivals, ended up so far apart. Both had soft fixed-income, currencies and commodities results. Goldman's equities franchise was big enough to absorb that weakness28. Its stock-trading revenue reached $6.44 billion5, and its net income of $5.3 billion beat the $4.2 billion analysts expected3. Morgan Stanley's equities revenue was $5.8 billion against expectations of $4.9 billion10. Its wealth unit took in a record $232 billion of net new assets10.

This looks structural, not a one-quarter event. Across five top lenders, equities desks earned close to $67 billion in the first nine months of 2026, about $5 billion more than their bond, currency and commodities businesses, according to Bloomberg figures cited in market commentary29. Wells Fargo analyst Mike Mayo called it a multi-year divergence between equities and fixed income29. The risk is concentration. A business driven by hedge-fund financing and derivatives can lose activity quickly when volatility fades.

Dealmaking: delayed, not cancelled

Investment banking is where the "lull" shows up. Reuters reported that fee growth slowed sharply from the second quarter, with a rate hike and several postponed high-profile IPOs hurting sentiment22. Year-over-year figures still looked good. Goldman's investment-banking fees rose 21% to $3.22 billion and JPMorgan's rose 14% to about $3.0 billion. But Citi's fees of $1.35 billion were 13% lower than the prior quarter5. Goldman's advisory revenue hit a record $1.65 billion, though its pipeline shrank1.

Executives said the same thing across banks. JPMorgan CFO Jeremy Barnum said IPOs were being "delayed rather than cancelled" and called the pipeline very strong28. Goldman CEO David Solomon said activity softened in September. He explained that issuers offered valuations 10% to 15% below what they expected may decide to wait28. Oura, Bamboo Insurance and Holtec Nuclear have all postponed listings28. Renaissance Capital still expects 2026 to beat last year's deal count, and the year has already set a record for IPO proceeds28.

The AI financing slowdown adds a more serious concern. Global AI-related debt issuance reportedly fell to $23 billion in September from $113 billion in June. Jamie Dimon confirmed that JPMorgan is tightening credit to avoid concentration risk30. AI cloud provider Firmus shelved an IPO that targeted a valuation above $30 billion30. If the AI capex cycle that drove bond issuance and advisory mandates is cooling, "delayed" may last longer than bankers suggest.

Interest rates: support for lenders, pressure on stocks

Rates are the key to reading this season. The Fed raised its target range by 25 basis points to 3.75%–4.00% in September, its first move since cutting in December 202516. For lenders the short-term effect is mostly positive. Reuters reported that net interest income rose and that analysts expect the September hike to add further support22. JPMorgan's NII grew about 13% to roughly $27 billion56. Bank of America has raised its NII guidance several times as rates stayed higher for longer. It now expects about 8% growth this year and at least another 8% in 202712.

That benefit is concentrated. NII accounts for about 70% of Citi's revenue but only around 23% at Goldman and 14% at Morgan Stanley13. Analysts call Goldman essentially rate-neutral14. The firms that depend most on capital markets get little from higher rates and lose the most when higher rates hold back deals.

The longer-term effect is less clear, and commentators disagree. Some describe a steep yield curve that favors large lenders12. Raymond James argues that a hawkish Fed has flattened the curve, which could squeeze margins18. Bloomberg Intelligence's Herman Chan warned that rates staying higher for longer could slow growth and increase loan losses29. For now, consumers are holding up. Bank executives pointed to steady spending and borrowing, and loan demand stayed firm24. JPMorgan's provision for credit losses fell from a year earlier, although a portfolio-related charge in the year-earlier quarter distorts that comparison5.

Bank stocks: worst streak since 2008

The market has treated the sector harshly. The KBW Bank Index was heading for a sixth straight weekly loss, which Bloomberg called its longest losing run since the 2008 financial crisis. It sat about 13% below its August record29. Barclays' Jason Goldberg counted 18 of 21 sessions since the September hike in which bank stocks trailed the S&P 500, the worst such stretch since the index started in 199229. Goldman and Morgan Stanley had the steepest falls from their 52-week highs, about 24% and 22%. JPMorgan held up best, down roughly 8%13.

The falls fit the analysis above. The stocks that dropped most are the ones most tied to trading and deals and least helped by higher rates. JPMorgan is the exception. Despite its miss, it was one of the few big banks to rise during results week29. That may reflect its capital position. Dimon cut net buybacks to $664 million and said the bank would keep capital for better uses, with a CET1 ratio of 13.9%67.

What to watch

The Fed's October 28 decision comes next29. Before the meeting, futures priced only about a 16%–18% chance of an October hike but roughly 75%–85% odds of one by December16. Our view is that the third quarter was not a sign of strain at Wall Street banks. It was the point where the easy gains ended. Lending income is solid and should improve as deposit costs lag the Fed. Equities desks are doing very well. But this season showed that strong profit growth does not lift bank stocks when deal pipelines stall and rate policy is moving toward tightening. A recovery in valuations probably needs the postponed IPOs to come to market, which bankers say they will do but which has not yet happened.