JPMorgan

America

Bank

Strong

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 <h3 id="key-takeaways">Key takeaways</h3>
 <ul>
 <li>US banking shares weaken despite billions in quarterly profits</li>
 <li>Rising Treasury yields pressure bond portfolios and trading revenue</li>
 <li>Investors fear higher funding costs and slowing dealmaking activity</li>
 </ul>
 US bank stocks are falling despite another profitable earnings season, exposing a growing disconnect between Wall Street's financial results and investors' confidence in the sector.
 The KBW Nasdaq Bank Index has declined more than 10% over three months, while the Dow Jones US Banks Index has lost over 7%, according to October 21 market reporting. Some individual banking shares have experienced considerably steeper declines.
 Yet major lenders continue generating billions in profits, supported by resilient consumer spending, loan demand and equity trading. The problem is that rising Treasury yields are making investors increasingly concerned about what happens next.JPMorgan and Goldman Sachs Report Billions in Profit 
 According to <a href="https://www.sec.gov/Archives/edgar/data/886982/000088698226000529/a3q26gsearningsresults.htm" rel="noopener noreferrer nofollow">Goldman Sachs' third-quarter earnings</a>, the bank generated $5.29 billion in net income on $18.68 billion in revenue, with earnings per share reaching $17.01.
 Its equities trading revenue surged 72% to $6.44 billion, demonstrating how market volatility can benefit investment banks even when broader financial conditions deteriorate.
 JPMorgan reported $15.3 billion in quarterly profit, although its earnings per share of $5.57 fell short of analysts' expectations. Citigroup performed better against forecasts, reporting a 40% profit increase to $5.25 billion.
 The contrast was already visible in the latest <a href="https://coinpaper.com/37219/citigroup-stock-vs-jpmorgan-stock-citi-profit-jumps-40-as-jpm-misses-earnings" rel="noopener noreferrer nofollow">JPMorgan and Citigroup earnings</a>, where strong overall profitability concealed weaker business segments.
 Meanwhile, <a href="https://coinpaper.com/37263/bank-of-america-reports-q3-earnings-miss-as-profit-drops-sharply" rel="noopener noreferrer nofollow">Bank of America</a> suffered a more direct earnings disappointment, including a $1.2 billion regulatory charge and weaker bond trading performance.Why Rising Treasury Yields Are Hurting Banks 
 The biggest concern comes from the bond market, where the benchmark 10-year Treasury yield recently reached approximately 5.35%, its highest level since 2002.
 Banks hold substantial portfolios of government bonds and other fixed-income securities. When yields rise, the market value of existing bonds declines, potentially creating unrealized losses.
 Recent <a href="https://coinpaper.com/37056/treasury-yields-hit-535-in-biggest-bond-selloff-since-2002" rel="noopener noreferrer nofollow">Treasury yield increases</a> therefore create balance-sheet pressure, although accounting treatment determines whether those losses immediately affect reported earnings.
 Higher interest rates can also benefit banks by increasing returns on loans. However, those benefits depend on how quickly banks must increase payments to depositors and other funding providers.
 Competition for <a href="https://coinpaper.com/35429/why-your-bank-wants-your-deposit-more-than-you-think" rel="noopener noreferrer nofollow">customer deposits</a> may narrow margins if funding costs rise faster than revenue from lending.Wall Street Fears a Longer Banking Slowdown 
 The latest earnings also reveal weakness in capital-market activity.
 JPMorgan's fixed-income trading revenue declined 4%, while investment banking fees fell 8% compared with the previous quarter. Across major Wall Street lenders, bond trading revenue weakened as higher yields discouraged financing activity.
 That represents a reversal from earlier periods when strong <a href="https://coinpaper.com/33026/jpm-stock-slips-despite-jpmorgans-strong-q2-earnings" rel="noopener noreferrer nofollow">investment banking activity</a> helped support financial-sector profits.
 Still, lending demand has not collapsed. PNC recently reported <a href="https://coinpaper.com/37451/pnc-loan-growth-hits-142-as-us-regional-banks-defy-high-interest-rates-and-inflation-concerns" rel="noopener noreferrer nofollow">14.2% loan growth</a>, highlighting differences between regional commercial banking and Wall Street's trading businesses.
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US Bank Stocks Fall Up to 25% Despite Strong Earnings: What Is Wall Street Afraid Of?

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