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JPMorgan and Wells Fargo Beat Q3 Earnings But Stocks Still Fall on Trade War Fears
Wall Street’s biggest banks kicked off third-quarter earnings season on October 14, 2025, with solid results that under normal circumstances would send stocks soaring. Instead, JPMorgan and Wells Fargo shares fell despite beating estimates as escalating U.S.-China trade tensions overwhelmed positive earnings news.
The S&P 500 dropped 0.95% to 6,592 points even as America’s largest bank reported stronger-than-expected profits. This disconnect between good earnings and falling prices signals that macro concerns now trump individual company performance – never a bullish sign for markets.
JPMorgan Delivers Another Beat
JPMorgan Chase reported earnings per share of $4.85, exactly matching analyst expectations of $4.85 on revenues of $45.47 billion. That represents an impressive 11% earnings increase compared to the same quarter last year.
However, the bank’s provision for credit losses rose 9% to $3.4 billion, exceeding the $3.08 billion estimate. This indicates JPMorgan is preparing for higher loan defaults down the road – not exactly confidence-inspiring about economic prospects.
Despite the solid results, JPMorgan shares edged lower in early trading. When America’s premier bank beats earnings but the stock falls anyway, it reveals that investors are focused on bigger worries than quarterly results.
CEO Jamie Dimon’s commentary on the earnings call will be crucial. If he expresses caution about consumer health or economic outlook, it could trigger broader market weakness. Conversely, if he sounds optimistic, it might help stabilize sentiment.
Wells Fargo Outperforms
Wells Fargo posted the day’s strongest performance among major banks, with shares jumping 2.7% after reporting earnings of $1.66 per share that beat estimates. Revenue grew 5% year-over-year, demonstrating that the bank’s turnaround efforts are gaining traction.
The 2.7% stock gain made Wells Fargo the clear winner among big bank earnings, outperforming JPMorgan, Citigroup, and Goldman Sachs. This outperformance reflects both strong results and relief that credit quality continues improving.
Wells Fargo’s CEO called the U.S. economy “resilient” during the earnings call, striking a more optimistic tone than some analysts expected. This positive assessment provided some support for the stock despite broader market weakness.
The bank’s net interest income guidance remains unchanged at $47.7 billion, slightly above Wall Street estimates. This stability in guidance matters because it suggests management isn’t seeing deterioration in their outlook despite economic uncertainty.
Goldman Sachs Crushes Estimates
Goldman Sachs reported EPS of $12.25, surpassing the $11 estimate by over 11%. That’s a massive beat that would normally drive significant stock gains.
Investment banking and trading revenues came in strong, benefiting from market volatility and corporate deal activity that picked up during the quarter. When markets are uncertain, volatility creates trading opportunities that benefit Goldman’s institutional business.
However, even Goldman’s impressive results couldn’t escape broader market pressure. The stock’s modest gains reflected celebration of strong earnings tempered by concern about what trade war escalation means for future quarters.
What Bank Earnings Reveal About the Economy
Beyond individual company results, bank earnings provide crucial insight into overall economic health. Several themes emerged:
Consumer Spending Holds Up: Credit card spending and loan demand remain relatively healthy, suggesting consumers haven’t pulled back dramatically despite concerns about economic slowdown.
Credit Quality Stable: Loan defaults haven’t spiked yet, indicating that most borrowers can still meet obligations. However, banks are provisioning more for future losses, suggesting caution about what’s coming.
Investment Banking Recovery: Deal activity improved from earlier in 2025, though it remains below peak levels. Companies are pursuing mergers and acquisitions again after a quiet period.
Net Interest Margins Pressured: As the Fed cuts rates, banks face pressure on lending margins. Lower rates help borrowers but hurt bank profitability from traditional lending.
Why Stocks Fell Despite Good News
The disconnect between positive earnings and falling stock prices reveals that investors care more about macro factors than company-specific results right now.
China retaliated against Trump’s tariff threats by sanctioning South Korean shipping companies and threatening further action. This escalation reignited fears that trade war will spiral out of control, damaging global growth.
The S&P 500 fell as much as 1.5% before paring losses to close down 0.95%. Even that recovery couldn’t lift bank stocks alongside broader indices.
When macro concerns dominate, individual stock fundamentals matter less. Investors sell everything regardless of quality when fear about systemic risks takes hold.
Fed Chair Powell Speaks Today
Adding to market volatility, Fed Chair Jerome Powell is scheduled to speak at midday. His comments could move markets significantly depending on what he says about economic outlook and rate cut plans.
If Powell expresses confidence in the economy and hints that rate cuts might pause, it could pressure stocks by removing expected monetary policy support.
Conversely, if Powell sounds concerned about growth and commits to continued easing, it might provide relief by ensuring accommodative policy will continue.
Bank stocks are particularly sensitive to Fed commentary because interest rate policy directly impacts their profitability. Any surprises in Powell’s remarks will likely trigger significant moves.
Broader Earnings Season Outlook
Analysts expect S&P 500 companies to report 7.9% earnings growth during Q3 according to FactSet data. If that figure holds, it would mark the ninth straight quarter of positive earnings growth.
However, that would represent deceleration from the 12% earnings growth reported in Q2. Slowing growth rates concern investors even when absolute growth remains positive.
The key question is guidance. If companies cut forecasts for Q4 and 2026 due to tariff uncertainty, it would validate bearish concerns. If guidance holds steady or improves, it would suggest the economy is more resilient than feared.
Johnson & Johnson also reported today, beating estimates with $2.80 adjusted EPS versus $2.76 expected. Pharmaceutical sales rose 6.8% year-over-year to $15.56 billion, showing strength in healthcare.
Technical Market Damage
From a technical perspective, Monday’s selling pressure broke several important support levels on the S&P 500. The index now trades below its 50-day moving average, a bearish signal that often precedes further weakness.
Bank stocks specifically have violated uptrend lines that held throughout most of 2025. If these broken supports now become resistance, it would confirm that the sector’s technical structure has deteriorated meaningfully.
Volume on Monday’s decline was heavy, indicating institutional selling rather than just retail panic. When big money exits positions, it typically signals more serious concerns than temporary fear.
What Investors Should Do
For bank stock investors, today’s mixed action creates difficult decisions. The earnings results are clearly positive, but macro headwinds are intensifying.
Long-term holders might view weakness as opportunities to add positions in quality names like JPMorgan trading at reasonable valuations. If you believe the U.S. avoids recession, bank stocks offer value.
Short-term traders probably want to wait for clearer signs that trade war fears are easing before committing capital. The risk of further market declines outweighs the potential for quick rebounds when macro uncertainty is this elevated.
Diversification across multiple banks reduces company-specific risk while maintaining sector exposure. Combining large, diversified banks like JPMorgan with regional banks creates balance.
The Credit Loss Provision Warning
JPMorgan’s higher-than-expected credit loss provision deserves attention. When America’s largest and best-managed bank sets aside more money for bad loans, it’s preparing for economic deterioration.
This doesn’t mean recession is imminent. Banks are required to provision conservatively, and they might be overcautious. However, it does suggest that JPMorgan’s economists see risks tilted toward weakness rather than strength.
If other banks report similar provision increases throughout earnings season, it would confirm that the banking industry collectively expects credit conditions to worsen. That’s concerning even if current performance remains solid.
The Bottom Line
JPMorgan and Wells Fargo delivered solid Q3 earnings that under normal circumstances would drive stock gains. Instead, shares fell or gained modestly as escalating trade war fears overwhelmed positive company news.
The S&P 500’s 0.95% decline to 6,592 points despite strong bank earnings demonstrates that macro concerns have seized control of market direction. Individual fundamentals matter less when systemic risks dominate investor thinking.
For investors, bank earnings confirm that the U.S. economy remains relatively healthy currently. However, forward-looking indicators like credit loss provisions suggest caution about what’s coming. Combined with trade war escalation, this creates an environment where even good news can’t lift stocks.
The rest of earnings season will reveal whether banks’ cautious optimism extends across other sectors or if economic cracks are widening beneath the surface.
⚠️ Disclaimer
This article is for informational purposes only and does not constitute financial advice. Always conduct your own research or consult with a professional financial advisor before making investment decisions.