Our team loves using Rho, the award-winning banking platform that makes it easy for startups to manage their money.
Rho offers top-of-the-line customer service and a seamless platform for expense management, company credit cards, and high-yield savings.
For a limited time, we’ve teamed up to offer qualifying Opening Bell Daily readers up to $1,500 in cash rewards for switching to Rho* — sign up today.
Banking on Q4
Made with AI by Opening Bell Daily
Wall Street will be watching Wall Street over the coming days as the biggest financial firms in the world begin reporting for what many expect to be a tepid quarter of earnings.
BlackRock, JPMorgan, Wells Fargo and BNY Mellon publish quarterly reports Friday. Goldman Sachs, Citi and Bank of America report Tuesday.
Here’s a snapshot of how this batch of stocks have performed over the last three months.
The financial sector as a whole is predicted to report a year-over-year earnings decline of 0.4% for the third quarter, according to FactSet estimates.
Most of that drag is due to big banks.
The banking industry — one of the five subgroups within the financial sector — is seen reporting 12% weaker earnings compared to a year ago.
Take out the banks, though, and financials would actually fare decently well.
FactSet reports that the other four industries in the sector are expected to see positive annual earnings growth:
Capital Markets, +11%
Insurance, +9%
Financial Services, +4%
Consumer Services, +1%
Now, for bank earnings, higher deposit costs are broadly expected to weigh on balance sheets.
Wall Street will be monitoring changes to net interest income in particular, which can fluctuate when the Fed cuts rates. This term describes the difference between the income banks earn from loans and the interest they pay on deposits.
When interest rates drop, banks can see lower yields on new loans — therefore lower net interest income.
Most banks are expected to see a drop in net interest income, with Wells Fargo leading the way with a forecasted sixth consecutive quarterly dip, according to data from Visible Alpha.
That said, as the Fed cuts rates in the coming months, the outlook for banks should come down — which is why most analysts are focused less on this quarter and more on what bank executives say will happen in 2025.
Comments or feedback? Reply directly to this email or let me know on X @philrosenn.
Elsewhere:
📈The US budget deficit topped $1.8 trillion in the latest fiscal year, according to the Congressional Budget Office. Higher spending on interest and programs for older Americans drove that figure higher. All in, the US collected $4.9 trillion in revenue and spent $6.75 trillion in the year up to September 30. (WSJ)
⛈️Hurricane Milton could disrupt Florida’s home insurance market. Rates there are high as is and many national insurers have fled due to storm risks. The Category 5 storm is expected to strike the state imminently and cause over $10 billion in insured losses, KBW analysts said. (Barron’s)
💵 The US economy faces a “no landing” scenario. Strong economic data have dashed hopes for those looking for cheaper borrowing costs. Many Americans have been holding out for lower rates to improve the affordability of homes, credit card bills, and more. Yet the economy and job market could still be too strong to warrant steep rate cuts from the Fed. (Business Insider)
🗞️ In case you missed it: Opening Bell Daily now publishes directly to 350,000 Bloomberg Terminal users globally. Full press release here.
Rapid-fire:
Atlanta Fed President Bostic said he remains “laser focused” on the 2% inflation target (Bloomberg)
Nvidia secured its fifth winning trading day in a row on Tuesday (Yahoo Finance)
The short-seller research firm Hindenburg announced it is betting against Roblox and the stock tumbled more than 9% (Bloomberg)
Hong Kong stocks tumbled to their worst day since 2008 as traders backed off the stimulus-fueled China rally (WSJ)
After Crypto.com recieved a Wells notice from the SEC, the exchange sued the regulator right back (CoinDesk)
Israel has deployed thousands more troops in Lebanon (FT)
China’s three most recent stimulus-fueled stock rally have all fizzled quickly, leaving Wall Street skeptical of what comes next (Opening Bell Daily)
Last thing:
Liz Young Thomas @LizThomasStrat
The NFIB’s Small Business Optimism index ticked up to 91.5, while the Uncertainty index rose to 103.0, a record high since 1974. Questions around the presidential election and interest rate paths likely playing a role.
