What Big Bank Earnings Aren’t Telling Investors Right NowVIEW IN BROWSER
For the past few weeks, investors have been trapped in a “fog of war.” They’ve been fixated on the headlines, worrying about oil prices, inflation and the implications for future rate cuts. That is understandable. The good news is that the first-quarter earnings season has arrived just in time. Because after weeks of anxiety, rumor and geopolitical noise, investors finally have something more concrete to focus on: numbers, guidance and tangible evidence about what is really happening in the economy. That is why the first wave of bank earnings matters. Now, longtime readers know I’ve never been a big fan of banks. I used to be a banking regulator, and I saw firsthand how flexible their financial reporting can be. That experience scarred me for life. It is one of the biggest reasons I still approach bank earnings with a healthy dose of skepticism. So no, I am not suddenly pounding the table on big banks. But because banks tend to report first, their earnings still offer an early read on the market and the economy. And this week’s results gave us a useful message. They told us that parts of the economy are holding up better than many feared. But there are still some signs that warrant caution. So today, let’s look at what three big bank earnings reports are really telling us. Then I’ll show you why that matters for what comes next – and where I believe the real opportunity is starting to emerge.
The Goldman Sachs Group, Inc.Let’s start with The Goldman Sachs Group, Inc. (GS), which kicked off earnings season on Monday morning. The firm announced a 19% year-over-year increase in earnings, to $5.6 billion, or $17.55 per share. Revenue rose 14% to $17.23 billion. Both earnings and revenue beat analysts’ expectations. Looking closer, Goldman posted record equities trading revenue of $5.33 billion, a 27% increase. Investment banking fees also rose 48% to $2.84 billion. Both numbers were above expectations. Despite these strong results, Goldman Sachs shares dipped 2% following the report, suggesting investors may be questioning the sustainability of this growth. That’s because Goldman’s strength came from trading and investment banking, areas that tend to benefit when markets get more active. JPMorgan Chase & Co.Next, we have JPMorgan Chase & Co. (JPM). It reported strong results, with earnings increasing 13% to $16.5 billion, or $5.94 per share, and revenue rose 10% to $50.54 billion. Both topped analysts’ estimates. Digging further into the report, fixed income trading revenue rose 21% to $7.08 billion. Investment banking fees increased 28% to $2.88 billion. JPMorgan also set aside less money for loan losses, indicating that borrowers are paying back their loans and suggesting that consumers are more financially stable. The company, however, lowered its 2026 net interest income guidance for 2026, from $104.5 billion to about $103 billion. CEO Jamie Dimon also struck a cautious tone, noting that while the U.S. economy remains resilient, there are still “significant uncertainties” ahead, including geopolitical risks, inflation pressures and elevated asset prices. Now, I have joked before that Jamie Dimon is a bit of a “worry wart,” and I think that’s the case here again. Shares of JPMorgan fell about 2%, despite the results and Dimon’s cautious outlook, which appeared to weigh on investor sentiment. Bank of America CorporationFinally, we turn to Bank of America Corporation (BAC), which reported Wednesday morning. Bank of America reported its highest earnings per share in nearly two decades, rising 17% to $1.11. Revenue rose 7.2% to $30.43 billion, thanks to rising net interest income, higher trading revenue and investment banking fees. But unlike the other banks, another factor contributed to its growth. Bank of America saw strength in its consumer business, with solid spending and stable credit quality. CEO Brian Moynihan emphasized that consumer spending remained solid and credit quality stayed stable, highlighting the resilience of the U.S. consumer despite ongoing uncertainty. Bank of America shares rose about 2% following the report. What Stock Grader Has to SayWhile each of the results looks solid on the surface, the bigger question is if they’re good buys right now. Let’s see what my Stock Grader system (subscription required) has to say about these big banks… 
Goldman Sachs earns a Total Grade of B, making it “Strong.” However, JPMorgan and Bank of America both have a Total Grade of C, making them “Neutral.” I should also add that all three have fundamental grades that are not exactly inspiring. So, while these banks did put up solid numbers, they don’t stand out. And they’re not the kind of fundamentally superior stocks I’m looking for. Bottom line: I wouldn’t consider them good buys right now. What These Earnings Are Really Telling UsWhen you step back and look at these reports together, a clear pattern emerges. The good news is that the economy is holding up better than many feared. But a lot of the strength we saw came from trading and investment banking businesses that tend to do well when markets get noisy. That kind of strength can produce a good quarter. It does not always produce durable market leadership. And that is the distinction investors need to keep in mind right now. I am not looking for stocks benefiting from short-term volatility. I am looking for stocks with the kind of long-term demand, earnings momentum and fundamental strength that can keep outperforming from here. That is exactly why tools like Stock Grader matter so much in a market like this. They help separate average stocks from the truly superior ones. And increasingly, they are pointing me toward a specific group of companies benefiting from what I call the “Hidden Crash.” While many investors remain stuck in crowded, slow-growth areas of the market, these companies are tied to a very different trend – one driven by real demand, not just market activity. In a recent presentation, I explained what the Hidden Crash is and how you can get ahead of it before the rest of the market catches on. Click here to learn more now. Sincerely, |
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