CWS Market Review – October 13, 2026

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Today is the unofficial kickoff of Q3 earnings season. Expectations are high and this looks to be another batch of solid earnings from Corporate America.

But, as we well know, Wall Street is an expectations game. For companies to do well, they not only need to post strong earnings, but they must do it stronger than expected. Even meeting expectations can send a stock reeling lower. Many companies expend a great deal of energy guiding analysts to where they want their expectations to be.

In addition to earnings, I’m also curious to hear any guidance companies may have for Q4 and the early part of 2027.

Typically, several of the major banks go first. This is particularly interesting this year because many bank stocks have not done very well over the past month. On top of that, we’re probably looking at another rate increase from the Fed before the end of the year.

Wall Street closed lower today by a tiny bit. It was the fourth daily drop in the last five sessions, but these have been minor moves. The S&P 500 is still very close to its all-time closing high from one week ago.

The divergence between the stock and bond markets is still the dominant theme on Wall Street. Over the last six months, the S&P 500 ETF (SPY) has gained 14% while the Long Term Treasury (TLT) is -7.6%. That’s an enormous gulf between the two. The long-term average is about 4% in favor of stocks.

As we stand now, Wall Street expects Q3 earnings growth of 30%. That’s very strong, and if it’s right, then this will go down as the third quarter in a row with +25% earnings growth, and the eighth in a row with double-digit earnings growth.

Another positive sign is that earnings estimates have been climbing higher in recent weeks. That’s not what usually happens. Typically, as earnings season approaches, earnings estimates are gradually pared back. This makes it easier for companies to claim that they “beat the Street.” Yes, a heavily manipulated Street.

We also want to keep an eye on the “beat rate.” Typically, about 75% to 80% of companies beat expectations. So far, 116 companies have issued guidance for Q3. Of those, 62% were positive. That’s well above the long-term average. Revenue growth is expected to be around 12%, and full-year earnings growth is expected to be about 26%, give or take.

When earnings are growing faster than revenue, that means companies are growing their profit margin. That’s good and bad. It generally means that companies are operating more efficiently, but it also means that profits are being goosed by higher prices. That may not be sustainable. To quote Jeff Bezos, “your margin is my opportunity.”

All 11 sectors are expected to report revenue growth for Q3. The forward P/E Ratio is currently around 19, which is higher than I like but not unreasonable, especially if the Fed only hikes a few times.

Now let’s look at some of today’s big bank earnings reports.

The Big Banks Report Q3 Earnings

Let’s start with JPMorgan Chase (JPM), which is the big boy on Wall Street (nearly $900 billion in market cap). This time, JPM posted a small miss. For Q3, JPM made $5.90 per share which was three cents below expectations. Revenue rose 8% which was also a miss. CEO Jamie Dimon said the U.S. economy is holding up well, but he noted risks like inflation, deficits, high asset prices and geopolitics.

Goldman Sachs (GS), another giant on Wall Street, had a strong beat. For Q3, Goldman made $17.01 per share. Expectations were for $13.09 per share. Earnings were up 29% and revenues were up 23% to $18.68 billion. The stock closed lower today, which tells me that traders have set the bar high this season.

Citigroup (C) also beat the Street. Profits jumped 40% to $5.2 billion, or $2.85 per share versus consensus of $2.65 per share on revenue of $23.85 billion. Citi had strength in markets, banking, and services. CEO Jane Fraser has been working hard to make Citi more competitive, and her efforts appear to be paying off, but it’s still early. Citi has often been, in my opinion, too complex and too top-heavy. It’s less so today. The stock was down over 5% today.

Wells Fargo (WFC) had mixed results. Profit rose 6% to $5.95 billion, or $1.87 per share which was a slight beat, but revenue of $21.87 billion missed estimates. Net interest income and loan growth were positives, but revenue overall fell short. Shares declined about 3% today.

Outside of the banks, we had a nice report from UnitedHealth (UNH) today ($4.69 vs. $4.14). UNH also raised its full-year guidance to earnings of at least $20.50 per share. The stock popped 5% early this morning but gave back its gains.

Johnson & Johnson (JNJ) reported $2.59 per share, which was a beat by six cents. Sales were up 5.9% to $25.4 billion. J&J also raised its full-year guidance to earnings of at least $11.15 per share. The stock, which is a Dow component, dropped 5.7% today.

Domino’s Pizza (DPZ) made $4.60 per share which was a 27-cent beat. Management cut U.S. net store growth guidance. DPZ is -4.8% today.

Bank of America (BAC), Morgan Stanley (MS) and BlackRock (BLK) report tomorrow.

Higher Mortgage Rates Are Weighing on the Housing Sector

The WSJ notes that home sellers are “starting to blink” on prices. That’s hardly a surprise, and the problem isn’t exactly hiding. Higher mortgage rates, now over 7%, are impacting the entire housing market.

It won’t take long before the bond market’s problem becomes a housing industry problem. The number of homes for sale is nearly back to pre-pandemic levels. In September, housing inventory was only 5% below where it was seven years ago.

Until now, homebuilders only had one major concern: stubborn sellers. That meant that competition from the existing market was practically nil. Now that’s changing, and homebuilders are feeling the squeeze.

Major Homebuilders like Lennar and KB Home said they’re facing tough competition from regular owners who are more motivated to sell. Lennar said that homes sold in the western region are down $44,000 from a year ago.

In an effort to entice buyers, home sellers are slashing prices. As a result, the major homebuilders are following the market lower. If not, they’re missing out.

In the four weeks through Sept. 20, 21% of sellers in the existing-home market dropped their asking price, data from Redfin shows. The most significant activity is happening with concessions, which don’t show up in headline prices.

In August, 45% of home sellers gave concessions to buyers, such as offering to cover the closing costs or handing the buyer money for repairs. In oversupplied Sunbelt housing markets such as Atlanta and Nashville, Tenn., seven in 10 sellers are now offering concessions. These are the same markets where home builders tend to cluster.

We’ll soon see outright price cuts. What happened is that four years ago, mortgage rates started to rise, but people who locked-in low rates refused to budge. As a result, that starved the market for new supply.

The big homebuilders were able to keep selling homes because they offered big mortgage-rate buydowns which undercut the market rates. The problem is that those are expensive and they cut into profit margins.

The WSJ notes that some sales per community usually drop about 4% in September. This year, sales are down 18%.

Homebuilders appear to be walking into a price war with home sellers, and higher mortgage rates are making the outlook even worse.

That’s all for now. The CPI report is due out tomorrow morning. Wall Street expects a 0.6% jump in headline inflation and a 0.4% rise in core inflation. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on October 13th, 2026 at 6:14 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.