{"id":1294974,"date":"2026-10-12T10:47:24","date_gmt":"2026-10-12T07:47:24","guid":{"rendered":"https:\/\/www.etoro.com\/?p=1294974"},"modified":"2026-10-12T10:47:24","modified_gmt":"2026-10-12T07:47:24","slug":"banks-open-earnings-season","status":"publish","type":"post","link":"https:\/\/www.etoro.com\/en-us\/news-and-analysis\/market-insights\/banks-open-earnings-season\/","title":{"rendered":"Banks Open Earnings Season"},"content":{"rendered":"

Analyst Weekly, October 12, 2026<\/b><\/p>\n

Earnings season begins this week, and the banks get the first turn at the microphone. Analysts expect S&P 500 profits to grow by about 30% from a year ago. That is a high bar for the market. For banks, the question is more awkward: if higher interest rates are supposed to help them, why have their shares fallen?<\/i><\/p>\n

Bank earnings: cheaper shares, expensive questions<\/b><\/p>\n

The answer is that rates do more than one thing at once. They can increase what banks earn on loans. They can also make deposits more expensive, reduce the value of bonds banks already own and, eventually, make life harder for borrowers. Third-quarter results will give investors their first proper look at how that arithmetic is working out.<\/p>\n

The trading test<\/b><\/p>\n

Trading was unusually strong in the second quarter, which makes the next quarter\u2019s comparison tricky. JPMorgan<\/b> management expects strong growth in trading and investment banking fees from a year ago. Bank of America<\/b> expects trading to be roughly flat and deal fees to fall. Goldman Sachs<\/b> has described strong stock trading, softer fixed-income trading, and higher costs.<\/p>\n

There is room for a surprise. Choppy markets in September may have given traders more client business than earlier forecasts assumed. The same uncertainty may have persuaded companies to put share sales or other deals on hold. Banks could therefore report busy trading desks and disappointing deal fees in the same quarter.<\/p>\n

Investment Takeaway<\/b>:<\/i><\/b> the number we would pair with trading revenue is expenses. A bank does not gain much from a surge in activity if the extra income disappears into pay and technology costs. Also, listen for whether deals in the pipeline are actually getting completed. A crowded pipeline does not pay shareholders until it becomes revenue.<\/i><\/p>\n

The rate catch<\/b><\/p>\n

When rates rise, some loans start earning more almost immediately. Depositors may take longer to demand a better rate on their savings. That delay can lift a bank\u2019s profits, but it cannot be assumed to last forever.<\/p>\n

This is the central test for regional banks.<\/b> Analysts expect modest loan growth, slightly wider interest margins and broadly stable credit this quarter. The risk is that banks must pay more to keep deposits as rates rise further. More loans sound encouraging; more loans funded with expensive deposits may be much less profitable.<\/p>\n

Investment Takeaway:<\/b> Watch <\/i>net interest margin<\/i><\/b>, the gap between interest earned and funding costs. If loans grow while that gap shrinks, the headline growth is less impressive. A bank growing loans while holding that margin steady is more impressive than one announcing impressive lending growth as its margin slips.<\/i><\/p>\n

The bond catch<\/b><\/p>\n

Higher yields also reduce the market value of older bonds that pay lower rates. Banks may intend to hold those bonds until they mature, so a paper loss is not automatically a cash loss or a sign of crisis. It can still weigh on shareholder capital and make management less eager to buy back shares.<\/p>\n

That gives investors a useful follow-up question: after the benefit to interest income and<\/i> the hit to bond values, how much capital can the bank return to shareholders?<\/p>\n

The credit check<\/b><\/p>\n

Credit may be the slower test. Higher borrowing costs can eventually strain households and businesses even while they initially help bank income. Analysts expect losses to remain broadly stable for now. Pay closer attention to missed payments and executives\u2019 comments about borrowers than to a small change in provisions alone.<\/p>\n

Investment Takeaway: <\/i><\/b>Falling bank shares might offer opportunities, but the sector is not automatically cheap: one estimate still puts large-bank valuations relative to tangible book value above their long-run average. This week, look for banks that can grow interest income without paying it all away to depositors, keep credit losses contained, and maintain enough capital for shareholder returns.<\/i><\/p>\n

A bank can beat its earnings forecast and fail those tests. It can also have an unremarkable quarter while making a stronger case for the years ahead. For investors, management\u2019s outlook for margins, costs and credit will matter more than a headline earnings beat. Those details help show whether this quarter\u2019s profits can last.<\/i><\/p>\n

Five Losing Weeks in a Row: Are Bank Stocks Ready for a Comeback?\u00a0<\/b><\/p>\n

The SPDR S&P Bank ETF (KBE) is currently trading at $63.10, around 12% below its August record high of $71.90. It has also recorded its fifth consecutive weekly decline and fallen below its 50-week moving average at $63.70.<\/p>\n

A similar decline occurred in March 2026 and in October and November 2025. On those occasions, the ETF quickly moved back above the important moving average. If that happens again, it could attract buyers and trigger a recovery toward the record high.<\/p>\n

The long-term uptrend remains intact for now. Only a break below the low of $56.80 would weaken this trend. A further short-term decline would therefore not automatically signal the end of the long-term uptrend.<\/p>\n

In the short term, however, the bears remain in control. This week\u2019s bank results will show whether that changes after the extended losing streak.<\/p>\n

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KBE, weekly chart. Source: etoro<\/i><\/p>\n

Sideways for Months: Is ASML Ready for the Next Breakout?\u00a0<\/b><\/p>\n

The debate over a potential AI bubble has become one of the key issues in global financial markets this autumn. Skeptics warn about the enormous investment costs and the risk of a correction. At the same time, the fundamentals of chipmakers and technology companies continue to point to strong growth.<\/p>\n

ASML will provide the next major test for the AI story on Wednesday. Investors have become more cautious ahead of the results. The stock fell almost 5% last week to \u20ac1,780.<\/p>\n

The long-term uptrend remains intact. The stock is only 11% below its record high. At the same time, it has been moving sideways at elevated levels since June. From a technical perspective, an upside breakout remains the most likely scenario. However, the results and the outlook will need to support that move.<\/p>\n

The low at \u20ac1,578 provides important support and has held several times in the medium term. If selling pressure increases, the market\u2019s reaction at this level will be crucial. On the upside, buyers have repeatedly been stopped near the high at \u20ac1,873.<\/p>\n

Tension ahead of the results is clearly building. ASML needs a decisive catalyst to end the sideways trend and trigger the next move.<\/p>\n

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ASML, weekly chart. Source: etoro<\/p>\n

Bitcoin approaches its first key support level<\/b><\/p>\n

Bitcoin is trading near $83,000<\/b>, with an improving internal market structure but demand still failing to follow through. Reduced selling pressure, lower leverage and accumulation by large holders contrast with weak institutional flows and an increasingly challenging macro environment.<\/p>\n

Higher bond yields, a stronger dollar and rising oil prices are tightening financial conditions and weighing on bitcoin, despite money supply growth. The October 14 US CPI release will be key, as persistent inflation could reinforce expectations of further Fed rate hikes and pressure risk assets.<\/p>\n

ETFs clearly reflect the loss of momentum.<\/b> Bitcoin has recorded $679 million in net outflows over the week<\/b>, while Ethereum has seen another $542 million in outflows<\/b>, marking nine consecutive sessions in negative territory.<\/p>\n

On-chain analysis offers a more positive counterpoint. Large addresses have accumulated more than 85,000 BTC over three weeks<\/b>, while perpetual futures open interest has declined from $69 billion to $65 billion following approximately $1.12 billion in liquidations. More than 70% of the supply remains in profit, and selling pressure from miners is easing.<\/p>\n

However, stablecoin liquidity, at around $306 billion<\/b>, has declined by 0.3% over the week, indicating that new capital is not flowing into crypto.<\/p>\n

For the coming weeks, I would watch three key levels:<\/p>\n