Goldman Sachs Crushes Earnings as Bank Season Kicks Off

Big bank earnings season kicked off this past week, and Goldman Sachs set the tone with results that blew past what Wall Street was expecting. The firm reported diluted earnings of $17.01 a share against a $13.65 consensus, on revenue of $18.68 billion versus an expected $17.03 billion, a beat large enough to lift the stock in early trading even as the rest of the sector turned in a far more mixed picture.

Trading and dealmaking power Goldman's quarter

The standout number came from Goldman's equities trading desk, where revenue jumped 72% year over year to $6.44 billion, driven largely by prime brokerage and derivatives activity, with equities financing revenue up 96% on its own. Investment banking advisory fees hit a record $1.65 billion as completed merger activity picked up, though the bank's deal backlog actually shrank from the prior quarter, a sign that future advisory revenue may cool even as this quarter's results looked strong. Asset and wealth management revenue rose 14% to $5.05 billion, with assets under supervision reaching a record $4.1 trillion.

CEO David Solomon called it the firm's second-highest quarterly net revenue total and a record for net revenue year-to-date, crediting continued client demand for Goldman's advice, execution, and financing services. The bank also disclosed it has agreed to acquire asset managers NEOS Investments and LCN Capital Partners, and declared a $5 quarterly dividend alongside share buybacks.

JPMorgan steady, Wells Fargo stumbles

JPMorgan Chase's results landed with far less drama. The bank's stock barely moved in the session following its report, reflecting a quarter that came in largely in line with expectations rather than delivering the kind of upside surprise Goldman posted. Wells Fargo had a tougher time of it: third-quarter revenue of $21.87 billion disappointed investors, and the stock fell 3% as the market digested the results.

What it signals for the sector

The divergence among the three banks underscores just how uneven this earnings season has been even within the same industry. Active markets and higher volatility have helped trading-heavy firms like Goldman Sachs, but banks more reliant on traditional lending and consumer banking like Wells Fargo have struggled more to stand out. The Financial Select Sector SPDR ETF, a broad gage of bank stocks, was up about 1% on the day, with Goldman's strength offsetting softer results elsewhere in the sector. More regional and consumer-focused banks will report in coming weeks, which should give a more complete picture of how the broader industry fared heading into the fourth quarter.