If you care where your savings rate, mortgage or credit card bill might head next, this week's bank earnings matter. Big-bank shares have slumped into reporting season, with the KBW Bank Index now roughly 12% below its mid-August peak, clearing the 10% line that defines a correction. The slide has landed alongside a jump in Treasury yields and the Federal Reserve delivering its first interest rate hike in three years. It also capped the index's toughest quarter since early 2023, when rising yields helped set off the regional-bank flare-up. And yes, the KBW gauge has trailed the broader market, based on Bloomberg data tracking changes since April 13, 2026.
Reports start before the opening bell Tuesday from Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Wells Fargo & Co., with Bank of America Corp. and Morgan Stanley due Wednesday. Analysts expect lending to be higher than a year ago and see credit quality holding steady. The whipsaw in bonds has squeezed margins as banks juggle deposit costs against income from loans, and rising credit card, auto and mortgage rates are piling on pressure. As Manulife John Hancock Investments strategist Matt Miskin put it, "higher yields can lead to better revenues, but they can also lead to a tipping point where consumers just can't pay these kinds of loans." Trading will be a focal point too, with analyst estimates compiled by Bloomberg pointing to nearly $19 billion in quarterly equity-trading revenue across the biggest players.
Bank earnings open the season and set the tone for everything after. Market Briefs covers that cycle free every morning.
There was a preview last month from early reporter Jefferies Financial Group Inc., which said its investment bank and equity-trading unit turned in a record quarter, even as other metrics were mixed. Positioning ahead of the numbers has been upbeat for JPMorgan, the largest U.S. bank. Options flow late last week showed stronger demand for calls that would pay out on a 10% jump than for puts guarding against a 10% drop, and call open interest topped puts, a potentially bullish setup.
Despite borrowing becoming more expensive and energy prices staying high - both factors that keep inflation concerns simmering - the economy has held up better than expected. Another set of risks is on their radar - spanning how artificial-intelligence agents could transform the industry to what the November midterm elections might set in motion - while surveys indicate Republicans have been losing ground in the polls as voters react to economic worries and the conflict in Iran. Since Republicans generally favor lighter oversight of finance, JPMorgan analysts argue that if the party were to sweep, it would likely benefit Bank of America, Citigroup and Wells Fargo.
On the brighter side, Wells Fargo's Mike Mayo argued last month that elections can "put a dent in de-regulation but should not derail it," and he expects the AI "scare trade" to fade as results land, noting "trust at banks is a moat for deposits." Morgan Stanley's Manan Gosalia called the recent selloff "an attractive entry point," and advised investors to set up now for a stronger 2027, and added that while higher rates lift funding costs, "at the same time revenue should also move higher." Heading into results, Christopher Harvey of CIBC Capital Markets expects bank executives to sound more cautious about consumer health and growth than they did a few months back. Even so, he sees room for a "relief rally," and if that bounce comes, he wrote, "we would use the pop as an opportunity to reduce exposure," preferring communication services and utilities over financials.
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