US Big Banks Open Earnings Season Under Pressure From Flat Yield Curve

Five of Wall Street's largest banks report second-quarter results on 14 July, opening what is expected to be a strong earnings season. JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup and Wells Fargo will be followed on Wednesday by Morgan Stanley, BlackRock, Bank of New York Mellon and PNC Financial. S&P 500 companies overall are forecast to post roughly a 24% rise in second-quarter profits, and the results should showcase robust capital markets activity given recent dealmaking. Bank stocks have already run hard: the KBW Nasdaq Bank Index climbed nearly 20% between late March and late June, outpacing a 13% gain in the broader market. Beneath the surface, however, analysts point to a tougher core business. Banks earn the spread between loan rates and deposit costs, and that gap is being compressed as the yield curve stays flat under a hawkish Federal Reserve. Fast-growing private credit funds are also taking on lending that banks once did, eroding growth and raising questions about hidden losses in a lightly regulated corner of the market. Analysts expect JPMorgan to report around $5.44 in earnings per share, up roughly 10% year on year but below the prior quarter.