With rates this high, shouldn't banks be earning more? Yet bank stocks have fallen 9% in a month. What should I look for in JPMorgan's earnings today?

For banks, high rates have a good side and a bad side at once

According to the report, the bank stock index is down 9% over the past month, while S&P 500 third-quarter earnings are expected to rise more than 30% (LSEG). If earnings growth expectations are high and the stocks have still fallen, the market is worried about the 'quality' of earnings, not the 'quantity.'

The good side

When lending rates rise, interest income increases, and when the gap between short- and long-term rates normalizes, net interest margins improve. In an environment where the BOK and the Fed are moving toward hikes, near-term earnings are protected.

The bad side

• Unrealized bond losses. The value of securities banks hold falls when long-term yields rise. One tally says U.S. banks' unrealized securities losses were about $325.1 billion in the first quarter of 2026, up from $306.1 billion in the prior quarter. Another report puts it at $316 billion as of June (FDIC), so the figures differ and need to be checked against the FDIC quarterly report. With the 10-year yield up to 5.24-5.36%, these losses are likely to have grown further in the third quarter. The direction is certain but the size is unconfirmed.
• Deposit outflows. In the report, retail investors are moving from deposits to T-bill ETFs (r/investing). Banks have to pay more interest to keep deposits, which squeezes margins.
• Loan quality. University of Michigan consumer sentiment fell to 46.3, and mortgage rates and energy costs weigh on households. If loan loss provisions rise, earnings fall.

What to look for in today's and tomorrow's earnings

Let's go by order rather than numbers.

1. Net interest income guidance. Whether the company raises or holds this year's guidance will decide the stock price.
2. Size of the increase in loan loss provisions. If consumer loan and credit card delinquency rates have risen, the decline in bank stocks is justified.
3. Deposit costs and deposit balances. Rising costs with falling deposits is the worst case.
4. Investment banking fees. Watch whether the M&A and IPO pipelines are alive at Goldman Sachs and Morgan Stanley. This tests whether the report's assessment that M&A is cautious because rates are high is right.

Analyst views are partly split. Evercore ISI saw JPMorgan and Goldman Sachs possibly delivering a 'beat and raise' (beating expectations and raising guidance), while BMO rated Goldman Sachs Market Perform, saying the upside is already priced in (TipRanks, undated). Consensus figures for this quarter differ by source, so we do not cite them.

What investors should do

• Do not set direction on one day's results. Judge them together with whether the 10-year yield exceeds 5.3% after the Oct. 14 CPI.
• The financial ETF (XLF) rose 0.58% on the day and is already showing signs of a rebound, so good earnings could win back part of the month's decline. Conversely, if provisions rise, the worsening market breadth that has been masked within the index could spread to banks.
• If you hold only an index fund, bank exposure is already inside the S&P 500, so there is no need to add to it separately.