Kicking off third quarter earnings season Tuesday with the usual bold profit announcements from JP Morgan and Goldman Sachs, expectations for market gains were given an added boost when United Health (UNH) chimed in with a strong quarterly report.
Because all three companies are components of the Dow 30, stock futures on the Dow climbed more than 400 points prior to the opening bell.
That was all well and good, but things seemed to go a bit haywire once the cash market opened. Instead of the Dow being bid higher and higher, the world’s most widely-watched index stalled at the opening high, and spent the rest of the session meandering along, just below the unchanged line. With early gains eviscerated within the first half hour of trading, disappointment ran deep.
JP Morgan ended the day down less than one percent. Goldman Sachs finished with a loss of 1.34%. Only United Health survived with gains for the day, up 1.98 points (0.52%).
Perhaps the plans to have stocks price higher on Tuesday was a bit too ambitious given the already-extreme pricing for stocks, not just in the tech sector, but just about everywhere among the most actives. In JP Morgan's case, the reported numbers fell short of estimates, which ran contrary to the pre-midterms operations (PMO™). Goldman Sachs had no excuse, reporting beats on both top and bottom lines, other than profit taking.
It's not a coincidence that bank stocks lead off each earnings season. The accounting games played by the big money banks are legendary, their statements largely about as clear-cut as a mud hole, but, as a group, they almost always deliver positive results, offering to investors the perception of an overall growing, robust economy, led by the banks that serve as the foundation of American enterprise.
After Tuesday's rout, scratch that. The reality to which the wisened investors on Wall Street have awakened is that major banks are black holes of depository debt, sketchy loans and even sketchier accounting practices. Bank of America (BAC) opened Wednesday's pre-market action by announcing Q3 profit falling 17% on a $1.2B penalty for anti-money-laundering activity and slower trading activity. Put in simpler terms, BofA was duly engaged in money laundering, got caught and shareholders are paying the price. BAC stock is down seven percent prior to the opening bell.
In addition to Bank of America, these companies also reported Q3 results Wednesday morning:
Morgan Stanley (MS) - top, bottom beat, shares down 3% pre-market
BlackRock (BLK) - Huge EPS and revenue beat, stock up over two percent pre-market
State Street (STT) - EPS beat, revenue miss results in 9% slide
ASML (ASML) - Earnings beat, revenue miss, shares down two percent
Progressive Insurance (PGR) - shares off six percent pre-market
Additionally, Wells Fargo (WFC) missed top and bottom, sending share down 1-2 percent. Citigroup (C) topped estimates but is down 1.5% heading toward the opening bell.
Maybe the bank stocks aren't all that pristine and investable. Understanding that they serve as the foundation of American enterprise and at the whims of government and big money interests labels them as some of the most corrupt companies on the planet, responsible for all manner of crimes and misdemeanors, from money-laundering to funding for enterprises set up to fail after seed investors extract profits. Lately, the retail banks (BAC, JPM, WFC, C) have been covering their tracks by under-reporting loan loss provisions. With consumers and small businesses stretched to the edge of survivability, credit usage has surged - even at rates of 10-20-30% - and bankruptcy filings are on the rise. The banks haven't disclosed much of what's happening underneath the hood, and many are exposed to credit defaults on commercial real estate and the AI hyperscaler build-out.
Wednesday also had a nasty surprise in September CPI, delivered an hour prior to the open:
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent on a seasonally adjusted basis in September after rising 0.4 percent in August, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.7 percent before seasonal adjustment.The index for gasoline rose 9.1 percent in September, accounting for over half of the monthly all items increase. The energy index increased 5.2 percent over the month following a 2.1-percent increase in August. The shelter index rose 0.4 percent in September after rising 0.3 percent in August. The index for food was unchanged in September, as the index for food away from home increased 0.2 percent and the index for food at home fell 0.1 percent.
The index for all items less food and energy rose 0.3 percent in September, as it did in August. Indexes that increased over the month include recreation, used cars and trucks, education, airline fares, medical care, and apparel. Conversely, the index for communication was among the small number of major indexes that decreased in September.
The all items index rose 3.7 percent for the 12 months ending September, a larger increase than the 3.4-percent increase reported for the 12 months ending in August. The all items less food and energy index rose 2.6 percent over the year, following a 2.4-percent increase over the 12 months ending August. The energy index increased 20.4 percent for the 12 months ending September. The food index increased 2.5 percent over the last year.
Futures took a serious nose-dive on the CPI news and have not recovered as the opening bell approaches. This is not going according to plan as the possibility of another rate hike by the Fed at the October 27-28 FOMC meeting comes into play.
Presently, the markets are behaving badly, as they should, given the current conditions. Reality strikes back.
At the Close, Tuesday, October 13, 2026:
Dow: 51,670.10, -180.45 (-0.35%)
NASDAQ: 27,204.38, -41.52 (-0.15%)
S&P 500: 7,805.45, -1.79 (-0.02%)
NYSE Composite: 23,985.00, -5.72 (-0.02%)
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