Key Points
Goldman Sachs earned $17.01 a share in the third quarter, roughly 30% above the $13.02 analysts expected, on revenue of $18.68 billion, up 23% from a year ago.
Equities trading revenue jumped 72% to $6.4 billion, and advisory fees hit a quarterly record.
The stock opened at $923 and touched $930.88, then gave it all back, closing down 0.2% at $891.91, about 23% below its 52-week high.
JPMorgan posted a rare miss: $5.57 a share against estimates near $5.90, as costs rose 12% while revenue grew 8%. Its shares slipped 0.9%, while Citigroup beat estimates and still dropped 5.6%.
Memory and chip-equipment stocks sold off again: Applied Materials fell 6.7%, Micron 3.6%, and South Korea's Kospi plunged 5.5%.
Goldman Sachs just turned in one of the best quarters in its 157-year history.
Revenue was the second highest it has ever reported. Profit beat Wall Street's estimate by nearly $4 a share. Advisory fees set an all-time high. The board even raised the dividend 25%.
Then the stock opened. Goldman traded more than 4% higher before the bell and touched $930.88 early in the session. By the close, it was all gone. Shares finished down 0.2% at $891.91, pennies above the day's low and roughly 23% below their 52-week high of $1,153.99.
That gap between blowout results and falling stocks was the story of the day. Wall Street is no longer asking whether the big banks made money this summer. It's asking how long it lasts.
The Quarter Wall Street Didn't See Coming
That $17.01 even includes a roughly $450 million charitable contribution that cost about $1 a share.
The engine was trading. With markets whipsawed by the war with Iran, oil above $100 and bond yields near 24-year highs, big investors traded constantly.
Dealmaking held up too. Investment banking fees rose 21% to $3.22 billion. Goldman remains No. 1 in global M&A, advising on $1.5 trillion of announced deals this year.
We recently wrote that JPMorgan and Bank of America were telling opposite stories about deal fees. Round one went to the bulls: JPMorgan's investment banking fees rose at a mid-teens rate, and Goldman's set records.
The Line Nobody Wanted to Read
Buried in Goldman's release was one sentence that matters more than the record. Its investment banking backlog, the pipeline of deals that haven't closed yet, fell from the end of June and is now slightly below where it started the year. David Solomon told analysts the backlog "remains very robust." A record quarter that drains the pipeline borrows from future ones.
JPMorgan said something similar. Jamie Dimon noted that trading and dealmaking activity "did moderate somewhat during the quarter." He also flagged large fiscal deficits, sticky inflation and rising rates as risks.
His bank also cut back on buybacks. When the most-watched banker in America holds more cash, investors notice.
JPMorgan Missed. Citi Beat and Got Hit Harder.
At JPMorgan, fixed income trading fell 4% from a year ago, and a $658 million securities loss cut 18 cents from earnings. The bank did raise its full-year forecast for net interest income to $106.2 billion from $105.5 billion, and equity trading revenue jumped 49%. It wasn't enough. The stock slipped 0.9% to $331.43.
Citigroup earned $2.85 a share against a $2.66 estimate and posted its best third-quarter revenue in a decade. The stock still dropped 5.6% to $124.53, as revenue and profit slipped from the second quarter and trading revenue fell 27% from the prior quarter. Wells Fargo beat on profit, missed on revenue and lost 3.1%. Bank of America and Morgan Stanley, which report Wednesday, slid 1.1% and 1.8% ahead of their own numbers.
Memory Chips Took the Hit Again
The selling started in Seoul. South Korea's Kospi plunged 5.46% on fears that Chinese memory makers are catching up, sinking SK hynix 9.5%. Micron fell 3.6% to $953.19, on top of a 3.9% drop Monday. Applied Materials sank 6.7% and Lam Research lost 2.7%.
The AI chip leaders held up. Nvidia rose 1%, AMD gained 1.9%, and the Philadelphia Semiconductor Index slipped only 0.2%. Microsoft's push into its own AI chips already showed how fast money rotates inside this group. Investors are now picking winners within the chip trade instead of buying all of it.
The broader market barely moved. The S&P 500 edged down 1.79 points to 7,805.45, near last week's record. The Dow fell 180.45 points, or 0.3%, to 51,670.10 after opening nearly 400 points higher. The Nasdaq slipped 0.2% to 27,204.38. The VIX, Wall Street's fear gauge, ended at 15.27.
The beat-and-sell pattern ran well beyond the banks. Johnson & Johnson topped estimates and raised its full-year outlook, yet fell 5.7% to $248.61 after its medical device sales missed for a second straight quarter. Domino's beat on profit and still dropped 4.8% after it scaled back its sales outlook. Bumble soared 56.6% on a $6.05-a-share cash buyout.
Bonds offered a little relief. The 10-year Treasury yield eased to about 5.22%, down from last week's 24-year high of 5.365%. Brent crude fell 96 cents to settle at $105.69 a barrel, while U.S. crude rose 40 cents to $94.14. But the International Monetary Fund warned Tuesday that inflation, government debt and AI spending could push yields sharply higher. Dylan has been warning about what repricing yields mean for retail investors, and that risk hasn't gone away.
What Lands Next
Wednesday morning brings the report that could matter most this month. September's consumer price index is due at 8:30 a.m. Eastern. Economists expect a 0.6% monthly jump, pushing annual inflation to roughly 3.6% from 3.4%, mostly on fuel. Core prices are seen rising just 0.2%.
It's the last major inflation reading before the Fed's October 28 decision. The Fed raised rates in September, and a hot number could put another hike on the table.
Bank of America and Morgan Stanley report Wednesday morning, which will settle the deal-fee debate. Chip-equipment giant ASML also reports Wednesday, and Taiwan Semiconductor follows Thursday. After two days of selling in memory and equipment stocks, those reports will show whether AI spending is still accelerating.
Goldman just showed what a great quarter looks like. The question now is whether the next one can match it.
This article is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.
Found this helpful? Share it with others.