JPMorgan Posts Rare Profit Miss as Goldman Sachs Rides Record Trading Surge to Big Beat

America’s biggest banks opened third-quarter earnings season on Tuesday with sharply divergent results: JPMorgan Chase posted a rare miss as dealmaking cooled and bond trading softened, while Goldman Sachs blew past expectations on the back of a record-setting surge in stock trading and advisory fees.

JPMorgan stumbles

JPMorgan, the nation’s largest lender, reported net income of $15.3 billion, or $5.57 a share, on managed revenue of $50.9 billion, up 8% from a year earlier. Both profit and revenue came in below Wall Street estimates. The results included a $658 million loss on investment securities that shaved 18 cents off earnings per share; excluding that item, the bank earned $5.75 a share.

Investment banking fees rose 14% from a year earlier but fell 8% from the second quarter. Equity markets revenue jumped 49% to $5.0 billion, while fixed-income markets revenue slipped 4% to $5.4 billion. The bank sharply reduced stock buybacks to $664 million and raised its full-year guidance for both net interest income and expenses. Its shares swung sharply in volatile trading after the release.

Chief Executive Jamie Dimon said strong business investment and consumer spending continued to drive the U.S. economy, but warned that “large fiscal deficits, sticky inflation, elevated asset prices, rising interest rates and geopolitical conditions continue to shift under the surface.”

Goldman rides the trading boom

Goldman Sachs earned $5.29 billion, or $17.01 a share, up from $12.25 a year earlier and far above the roughly $13.02 analysts had forecast, according to LSEG data cited by Reuters. Net revenue climbed 23% to $18.68 billion, the second-highest quarterly total in the firm’s history.

Equities revenue soared 72% to $6.44 billion as investors repositioned amid the Federal Reserve’s rate increase, high fuel costs tied to the Middle East conflict and a selloff in chip stocks. Investment banking fees rose 21% to $3.22 billion, with advisory revenue hitting a record, even as global M&A volume fell 41% from the prior quarter. Fixed income, currency and commodities revenue dipped 1% to $3.47 billion.

Chief Executive David Solomon told analysts the deal pipeline remains robust and pushed back on recent reports about his succession, saying “there is no succession transition or timeline underway.”

Citi and Wells Fargo

Citigroup reported net income of $5.2 billion, or $2.85 a share, on revenue of $23.8 billion, up 8% from a year earlier, driven by growth in services, wealth, markets and banking. Wells Fargo earned $6.0 billion, or $1.87 a share, up 13%, but its $21.9 billion in revenue fell short of analyst expectations.

What to watch

Bank of America and Morgan Stanley are scheduled to report on Wednesday. Investors will be watching whether a high-rate environment begins to slow the pipeline of initial public offerings and whether this year’s exceptional trading revenue can be sustained once portfolios have been repositioned.