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By: Fiona Cincotta, Senior Market Analyst
JPMorgan Chase's equity trading revenue jumped 9% year on year to a record $4.95 billion, even as the bank missed third quarter earnings and revenue expectations. Bank earnings are lending support to the S&P 500 through gains in Goldman Sachs, whereas weakness in semiconductor stocks is pulling the Nasdaq and the broader index the other way. That split leaves the S&P 500 near record territory with two of its biggest influences moving in opposite directions. For investors watching the index, the headline level now hides a sharp divergence between bank stocks and chipmakers.
Fiona Cincotta, StoneX Senior Market Analyst, has spent more than 15 years trading and analyzing UK, European and U.S. markets. She covers forex, equities, commodities and crypto assets, combining fundamental and technical analysis to track how earnings, rates and index patterns interact.
Bank trading desks are the standout performers of U.S. bank earnings, led by JPMorgan Chase's record $4.95 billion quarter in equity trading. "Market volatility, particularly in the equities, is creating opportunities for the trading desks", Cincotta says of the common thread running through the results. Citigroup posted its best third quarter for fixed income trading in more than a decade, and stronger equities revenue helped drive Goldman Sachs shares higher. The trading boost is not uniform, though, as JPMorgan Chase reported weaker than expected fixed income trading revenue and a slowdown in investment banking fees toward the end of the quarter. Consequently, trading strength rather than headline profit is what is moving bank shares, with Goldman Sachs gains helping support the S&P 500.
The S&P 500 broke out of a symmetrical triangle pattern to fresh record highs before easing back, and that breakout has so far lacked momentum. Specifically, gains in Goldman Sachs are helping support the S&P 500, whereas weakness in technology stocks, particularly semiconductor stocks, is putting pressure on both the Nasdaq and the broader index. On the technical side, a slide back inside the triangle pattern would weaken the bullish picture for the S&P 500, which keeps support levels in focus. According to Cincotta, "the earnings at this stage don't signal any immediate deterioration in the U.S. economy, but they do suggest that investors will need to be a little bit selective". For the S&P 500, that means the index can hold near records even as banks and chipmakers pull in opposite directions beneath the surface.
--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: Fiona Cincotta, StoneX Senior Market Analyst
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