Q3 Earnings Kick Off with Bank Stress and Inflation Watch

Key points

• JPMorgan, Goldman Sachs, Wells Fargo, and Citi report earnings Tuesday, followed by Bank of America and Morgan Stanley on Wednesday.
• Bank profits are expected to decline quarter-over-quarter due to high interest rates, despite strong annual performance.
• The September Consumer Price Index report on Wednesday will influence whether the Fed raises rates in October or December.
• Traders price an 80% chance of a rate hike in October, though some Fed officials suggest waiting.
• Telecom stocks dropped after SpaceX announced it acquired a nationwide low-band spectrum license, raising concerns about Starlink competition.

Background

The US economy has faced five years of above-target inflation, exacerbated by the Iran war since February 2026. The Fed raised rates by 25 basis points in September to 3.75%-4.0%, with the dot plot indicating further hikes may be needed. This follows a period of strong bank profits, which are now facing headwinds from high yields and softer trading activity.

Why it matters

Bank earnings and inflation data will determine market sentiment and Fed policy. A rate hike in October could impact borrowing costs and equity valuations, while the SpaceX spectrum deal signals potential disruption in the telecom sector.

What to watch

Investors will watch the September CPI report on Wednesday and PPI on Thursday. The Fed's October meeting decision will follow, with markets pricing in a likely hike. Telecom stocks may continue to face pressure from Starlink competition.