Rising Interest Rates Bite Some Wall St. Banks — SkimNews
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- JPMorgan Chase reported Q3 profit of $15.3 billion, falling short of analyst expectations that it would exceed $16 billion — a meaningful miss by a bank long seen as an economic bellwether
- The Federal Reserve's recent interest rate increase sent bond prices falling, driving an unexpected drop in JPMorgan's debt trading revenue and investment losses at Wells Fargo
- Goldman Sachs posted Q3 profit up 29% year-over-year and revenue up 23%, vastly exceeding analyst estimates
- Goldman's beat was bolstered by lucrative underwriting fees from this summer's SpaceX IPO and related euphoria in its stock trading business
- Citi also capitalized on equities trading momentum in Q3, joining Goldman in making a "mountain" off that segment
- The divergent results followed one of the industry's most profitable stretches ever, fueled by a borrowing binge financing aggressive AI infrastructure buildout
Why it matters: JPMorgan's shortfall of at least $700 million reveals that the Fed's rate hikes are starting to bite even the most diversified Wall Street franchise, with bond-market pain now spreading to Wells Fargo's books. Goldman's 29% profit surge — powered by SpaceX IPO fees — shows that marquee deal underwriters can still more than offset trading turbulence in a higher-rate environment.
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