Over the past few weeks, investors have been trapped in the “fog of war.”
They were fixated on the headlines, worrying about oil prices, inflation and the implications of future interest rate cuts.
This is understandable.
The good news is that first-quarter earnings season has arrived at the right time.
Because after weeks of anxiety, rumors, and geopolitical noise, investors finally have something more concrete to focus on: numbers, guidance, and concrete evidence about what’s really happening in the economy.
That’s why the first wave of bank profits is important.
Now, long-time readers know that I’ve never been a big fan of banks.
I used to work as a banking regulator, and I saw first-hand how flexible their financial reporting was.
That experience scarred me for life. It’s one of the biggest reasons I still treat bank profits with a healthy dose of skepticism.
So no, I’m not suddenly slamming the table on the big banks.
But because banks tend to report first, their earnings still provide an early read on the market and economy.
This week’s results give us a useful message.
They told us that parts of the economy are holding up better than many feared. But there are still some signs that call for caution.
So, today let’s take a look at what the big three banks’ earnings reports tell us.
Then I’ll show you why this is important in what comes next – and where I think the real opportunity starts to emerge.
Goldman Sachs Group, Inc
Let’s start with Goldman Sachs Group, Inc (A), which kicked off earnings season Monday morning.
The company reported a 19% year-over-year increase in earnings, to $5.6 billion, or $17.55 per share. Revenue rose 14% to $17.23 billion.
Earnings and revenues exceeded analysts’ expectations.
Looking more closely, Goldman posted record revenue from stock trading of $5.33 billion, an increase of 27%. Investment banking fees also rose 48% to $2.84 billion. Both numbers were higher than expectations.
Despite these strong results, Goldman Sachs shares fell 2% after the report, suggesting that investors may be questioning the sustainability of this growth.
That’s because Goldman’s strength came from trading and investment banking, areas that tend to benefit when markets become more active.
JPMorgan Chase & Co
Next, we have JPMorgan Chase & Co (JBM).
It reported strong results, with earnings increasing 13% to $16.5 billion, or $5.94 per share, and revenues rising 10% to $50.54 billion. Both exceeded analyst estimates.
Digging deeper into the report, fixed income trading revenues rose 21% to $7.08 billion. Investment banking fees rose 28% to $2.88 billion.
JPMorgan also set aside less money for loan losses, which indicates that borrowers are paying down their loans and that consumers are more financially stable. However, the company lowered its guidance for 2026 net interest income for 2026, from $104.5 billion to about $103 billion.
CEO Jamie Dimon also struck a cautious tone, noting that while the US economy remains resilient, there are still “significant uncertainties” ahead, including geopolitical risks, inflation pressures and rising asset prices.
Now, I’ve joked before that Jamie Damon is kind of an “anxiety wart,” and I think that’s the case here again. JPMorgan shares fell about 2%, despite Dimon’s cautious results and outlook, which appeared to affect investor sentiment.
Bank of America Corporation
Finally we move on Bank of America Corporation (Buck), as reported Wednesday morning.
Bank of America reported its highest earnings per share in nearly two decades, rising 17% to $1.11.
Revenue rose 7.2% to $30.43 billion, thanks to higher net interest income and higher trading revenue and investment banking fees.
But unlike other banks, another factor contributed to its growth.
Bank of America saw strength in its consumer business, with strong spending and stable credit quality.
CEO Brian Moynihan emphasized that consumer spending remained strong and credit quality remained stable, highlighting the resilience of the US consumer despite ongoing uncertainty.
Bank of America shares rose about 2% after the report.
What a stock grader has to say
While all the results look solid on the surface, the bigger question is whether the buying is good at the moment.
Let’s see what’s wrong with me Inventory classification system (Subscription required) He says about these major banks…
Goldman Sachs received an overall grade of B, making it “strong.”
However, both JPMorgan and Bank of America received an overall grade of C, making them “neutral.”
I should also add that all three have base scores that aren’t exactly inspiring. So, while these banks have reported solid numbers, they don’t stand out. And it’s not the kind of fundamentally outperforming stock I’m looking for.
Bottom line: I don’t consider them to be good buys at the moment.
What do these earnings really tell us?
When you step back and look at these reports together, a clear pattern emerges.
The good news is that the economy is holding up better than many feared.
But much of the strength we’ve seen has come from commercial and investment banking, which tend to do well when markets get noisy.
That kind of power can produce a good quarter.
It does not always produce lasting market leadership.
This is the difference that investors should take into account now.
I’m not looking for stocks that benefit from short-term volatility. I’m looking for stocks that have the kind of long-term demand, earnings momentum and fundamental strength that can continue to outperform from here.
This is exactly why tools like Stock Grader are so important in a market like this.
It helps separate average stocks from truly outperforming stocks.
Increasingly, they point me toward a specific group of companies that benefit from what I call… “Hidden Crash.”
While many investors remain stuck in crowded, slow-growing areas of the market, these companies are connected to a completely different trend – one driven by real demand, not just market activity.
In a Last offerI’ve explained what a hidden crash is and how you can overcome it before it catches up with the rest of the market.
sincerely,
Louis Navellier
editor, Market 360
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