Today is what traders call Big Bank Day. JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo all report third-quarter earnings before the opening bell, the traditional kickoff to Wall Street's earnings season. UnitedHealth and Johnson and Johnson also report this morning, giving investors an early read on both the health of consumer banking and the broader economy.
The reports land at an unusually jittery moment. A selloff in chipmaking stocks that began in Asia has spread worldwide. Samsung Electronics and SK Hynix, the two companies that together make most of the world's memory chips, led a slide that pulled South Korea's Kospi index down sharply and dragged a broader Asian benchmark to its lowest level since August. The drop followed a report that raised questions about how much revenue OpenAI, the artificial intelligence company at the center of a huge buildout of computing capacity, is actually generating compared to figures that had circulated in the market. Nasdaq-100 futures fell as the selling spread to the United States.
Behind the memory chip slide is a simple story: demand for the chips that power artificial intelligence servers and data centers has been treated by investors as a one-way bet for much of this year, with Samsung and SK Hynix stock prices rising on expectations of sustained, heavy spending by AI companies. When any crack appears in that demand story, as happened this week, the reaction can be outsized because so much of the gain was built on expectations of future growth rather than current profits.
For the banks reporting today, analysts are watching different things. JPMorgan, with the largest revenue base of the week, is expected to set the tone for peers. Goldman Sachs results will hinge on trading and advisory fees, Citigroup's on the progress of its long-running restructuring, and Wells Fargo's on net interest income, the difference between what a bank earns on loans and pays out on deposits. Wednesday brings Morgan Stanley and chip equipment maker ASML, whose order book is closely watched as a gauge of how much semiconductor companies plan to keep spending.
Inflation data lands Wednesday with the Consumer Price Index for September, followed by retail sales and producer prices Thursday. The Federal Reserve's next rate decision is due October 28, and policymakers have entered the quiet period before that meeting where they generally avoid public comment.
Why are chip stocks falling?
A report questioning how much revenue AI company OpenAI is actually generating, compared with figures that had circulated earlier, unsettled investors who had bid up memory-chip makers like Samsung and SK Hynix on expectations of continued heavy AI spending.
Which banks report earnings today?
JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo all report before the market opens, alongside UnitedHealth and Johnson and Johnson.