Big US bank stocks are in correction territory as earnings season begins, with the KBW Bank Index dropping over 10% since mid-August. Wall Street banks are expected to report a quarterly stock-trading haul of nearly $19 billion. Despite expectations of rising lending and steady credit quality, the sector faces pressure from the highest borrowing costs in decades and surging Treasury yields.
Matt Miskin of Manulife John Hancock warns that while higher yields can boost revenues, they may reach a tipping point where consumers struggle to pay. Major banks including Citigroup, Goldman Sachs, JPMorgan Chase, and Wells Fargo report this week. Analysts like Manan Gosalia at Morgan Stanley view the selloff as an attractive entry point, citing a sturdy economy and AI investing.
Christopher Harvey of CIBC Capital Markets anticipates a relief rally post-earnings, noting banks typically bounce after periods of lagging performance. Investors weigh risks from AI agents and political fallout ahead of the November midterms.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing