Bank Earnings Meet a Bond Rout 🏦

Welcome back to the Day Trading newsletter 📈

Stocks ended near record highs, with the S&P 500 up about 1.2% as a Friday rebound erased a midweek AI-driven tech selloff and Treasury yields at 24-year highs. Now the big banks step up to report.

Let’s get into it 👇️ 

📆 Monday 10/12 — Columbus Day Bond Market Closure (all day ET): Treasury trading is shut while stocks stay open, a quiet start after yields hit 24-year highs. Watch for catch-up moves in yields when bonds reopen Tuesday.

📆 Tuesday 10/13 — JPMorgan, Goldman Sachs, Citigroup and Wells Fargo Earnings (pre-market ET): The first big test for a bank sector down about 9% in a month. Watch net interest income guidance and deposit costs.

📆 Wednesday 10/14 — September CPI (8:30 a.m. ET): Economists expect inflation of 3.6% from a year earlier, up from 3.4%, with core at 2.5%. A hotter print would raise the odds of another Fed hike.

📆 Wednesday 10/14 — Bank of America and Morgan Stanley Earnings (pre-market ET): The other two of the six biggest lenders report on a heavy data day. Watch investment-banking and trading results.

📆 Thursday 10/15 — TSMC Earnings (2:00 a.m. ET): The chipmaker is the bellwether for AI demand, and its results land after a rough week for AI-linked stocks. Retail sales and PPI inflation data also hit at 8:30 a.m. ET.

🚀 SpaceX agreed to buy a nationwide block of low-band wireless spectrum from Grain Management for about $8 billion. The airwaves travel farther and reach indoors, helping SpaceX build a Starlink mobile network. AT&T, Verizon and T-Mobile sold off sharply on the competitive threat while SpaceX shares rose about 3%.

✈️ Delta Air Lines cut its 2026 profit forecast Friday as surging fuel costs outpaced fare increases. Adjusted third-quarter earnings of $1.72 a share missed estimates by 4 cents, and full-year guidance fell to $5.10-$5.60 from $6.50-$7.50. Delta expects its annual fuel bill to rise about $6 billion.

⛽️ President Trump said Friday he struck a deal with Vladimir Putin for Russia to send the U.S. more than 300,000 tons of diesel immediately. Another 500,000 tons is slated for November. Diesel averaged nearly $6.28 a gallon Friday, per AAA, versus about $3.68 a year ago, and energy experts doubt the deal will meaningfully lower prices.

🔼 Humana shares surged by double digits Friday after new federal ratings put 95% of its Medicare Advantage members in plans rated four stars or higher for 2027. That is up from 20% this year, and high ratings unlock bonus payments from the government. J.P. Morgan expects UnitedHealth and CVS to see their shares of top-rated members fall.

📱 Apple shares slid Friday after Nikkei Asia reported the company told suppliers to cut iPhone 18 Pro component orders. October orders were reduced by at least 15%, Nikkei said, as higher prices and costlier memory chips weigh on demand. Reuters could not immediately verify the report, and Apple did not comment.

📉 Consumer sentiment fell to 46.3 in October, a five-month low, according to the University of Michigan's preliminary survey. The reading came in below forecasts, and households now expect prices to rise 4.7% over the next year, up from 4.6% last month. Souring moods matter because consumer spending powers most of the U.S. economy.

🔻 Tech stocks sank Thursday after the Financial Times reported OpenAI's annualized revenue is approaching $50 billion, about $20 billion below figures investors had been circulating. The Nasdaq 100 fell 1.4%, Oracle dropped more than 5% and Nvidia nearly 3%, feeding worries about how long massive AI spending can last. Tech rebounded Friday.

⛈️ Hurricane Isaias, which came ashore near Destin, Florida, forced producers to shut in about 63% of U.S. Gulf of Mexico oil output, roughly 1.3 million barrels a day. Oil still eased Friday after President Trump said the U.S. would not attack Iran before the November 3 midterms, with Brent above $100 a barrel and U.S. crude around $91.

Big-bank earnings kick off Tuesday, when JPMorgan, Goldman Sachs, Citigroup and Wells Fargo report before the open, followed Wednesday by Bank of America and Morgan Stanley.

The reports arrive with the S&P 500 banks index down about 9% over the past month, making it one of the market's weakest groups even as the broader index sits within a fraction of a point of its record. 

Several big names, including Goldman Sachs and Bank of America, have fallen by double digits over that stretch.

The culprit is the bond market.

The 10-year Treasury yield, the rate the government pays to borrow for a decade, closed Friday around 5.2% after touching a 24-year high above 5.3% on Wednesday, and the Fed raised rates last month for the first time since 2023.

Fast-rising yields can hurt banks in several ways:

• the bonds they already own lose value

• they must pay savers more to keep deposits

• and costlier borrowing can cool loan demand and delay IPOs that generate investment-banking fees

The setup is awkward because corporate profits overall are booming.

S&P 500 earnings are expected to jump more than 30% in the third quarter, according to LSEG, so banks have to show they can keep up.

What to watch:

• Listen for what executives say about net interest income (the gap between what banks earn on loans and pay on deposits), deposit costs, trading revenue, and credit quality.

• Wednesday's September CPI report, due at 8:30 a.m. ET, lands the same day as two more banks. Economists expect inflation of 3.6% from a year earlier, up from 3.4%.

  • A hot number would raise the odds of another Fed hike at its October 27-28 meeting, though traders have recently scaled back those bets.

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⚠️ Disclaimer: Not financial advice. Do your research before making any trades.