CWS Market Review – October 6, 2026

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On Tuesday, the stock market rallied for the fourth day in a row, and the S&P 500 reached a new all-time high. It took nearly two months for the market to surpass its previous high from August 13. Over the last four years, the S&P 500 is up 109%. Growth stocks have been especially popular. Since July 30, the S&P 500 Growth ETF (SPYG) is up by 13.4%.

I always find it fascinating how easily the stock market can ignore scary headlines and calmly march higher. The stock market indeed climbs a wall of worry. The latest worry is in the bond market. Earlier today, the yield on the 10-year Treasury topped 5.35%. That’s up 70 basis points over the last month.

The impact of higher rates is real. With rates so high, more Americans are choosing to stay put. Homeowners are sitting on record amounts of home equity, but they’re choosing to not use it.

There’s a lot to get to this week, so let’s first look at Friday’s jobs report which has forced the Federal Reserve to hold off its rate-hiking plans for now.

A Big Miss for the September Jobs Report

Wall Street got a big shock on Friday when the Bureau of Labor Statistics said that the U.S. economy created just 29,000 net new jobs last month. Economists had been expecting a gain of 84,000 jobs. The unemployment rate rose to 4.2%. That was 0.1% higher than expected.

The monthly unemployment rate has been below 5% for the last 61 months in a row. That includes the government shutdown month of October 2025. That’s the longest streak since the 64-month run from March 1965 to June 1970.

The numbers for August were revised lower. The combined revisions showed a new loss of 60,000 jobs. July flipped to a loss of 10,000 jobs. Over the last 18 months, the U.S. economy has created 667,000 new jobs. Over the 18 months prior to that, the economy created 1.96 million jobs.

Here’s a look at the growth of non-farm payrolls:

Once the jobs report came out, traders rushed to change their bets on the odds of another Fed rate increase. The Fed meets again three weeks from tomorrow. Traders now place an 80% chance that the Fed will hold rates steady. In retrospect, it looks like the strong number we originally had for August was an outlier.

Here are some of the details from the report:

Most of the monthly job gains came from healthcare, which added 17,000 workers. Construction was up by 11,000, and manufacturing added 9,000.

Government employment fell by 17,000, while temporary help services saw a decline of 11,000, and information services lost 10,000 amid worries over the impact artificial intelligence may have on the jobs picture. Financial activities also saw a drop of 7,000 jobs.

The labor force participation rate increased by 0.2% to 61.8%. That was its highest reading since May. The broader U-6 unemployment rate dropped slightly to 7.6%.

I’m still concerned about wages. The jobs report said that average hourly earnings rose by 0.1% last month. Wall Street had been expecting 0.1%. Over the last 12 months, wages are up by 3%. That’s the slowest growth rate in five years. The average work week was unchanged at 34.6 hours.

This report gives the Fed political cover to leave rates alone at this month’s meeting. After that, there’s still a good chance the Fed will hike in December. In other words, the jobs report merely delays the Fed, but it doesn’t change the Fed’s gameplan.

The next big event to consider is the upcoming earnings season. Here’s a preview of some of the big bank earnings coming our way.

The Big Banks Report Next Week

The third-quarter earnings season has its unofficial kickoff next week. On Tuesday, October 13, several major banks are due to report their earnings. This includes JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo.

Let’s take a close look at what to expect. JPMorgan Chase (JPM) is the biggie, and everyone wants to hear what Jamie Dimon has to say about the economy and the banking sector.

Analysts will be watching for loan growth, consumer credit and net interest income. For now, the consensus on Wall Street is that JPM will make $5.90 per share on revenue of $51 billion. Oppenheimer recently nudged its JPM estimate higher and JPM is the only large bank it expects to beat the Street.

Next up is Goldman Sachs (GS). This is another titan of Wall Street. The consensus is for EPS of $13.50 to $14.30 per share on revenue of $17 billion. The keys to watch out for are trading and investment-banking fees. GS has beaten estimates in each of the last four quarters.

Goldman is the purest read on capital markets. Trading has been the stronger leg with investment-banking fees looking softer. Oppenheimer cut its investment banking revenue view by 9.5% while lifting trading by about 6%, and it cut EPS forecasts for Goldman, Morgan Stanley, Bank of America and Citigroup. A miss on advisory or equity underwriting would hit Goldman harder than it would a universal bank.

Citigroup (C). Oh boy, what to say? Citi is still in the middle of a long-term cleanup. Management has guided full-year 2026 return on tangible common equity toward a bit above 11%, an efficiency ratio around 60% or better, and NII excluding markets at or above 5% to 6% growth.

Consensus revenue is about $23.7 billion to $23.8 billion versus $22 billion a year earlier. Investors will be watching whether the beat streak on expenses and capital return continues. Consensus is for earnings of $2.65 per share on revenue of $23.7 billion.

Wells Fargo (WFC) is more about core banking: net interest income, commercial loan growth and provisions. EPS consensus is at $1.84 with revenue at $22.3 billion. The EPS rose modestly above the year-ago quarter. Consensus EPS is only modestly above the year-ago quarter.

On Wednesday, Bank of America and Morgan Stanley are due up along with BlackRock.

Here’s how the S&P 500 Financials (XLF) have been performing. Not so good lately.

After JPMorgan, Bank of America (BAC) is the cleanest large-scale read on net interest income and consumer/commercial credit. BofA has earnings consensus at $1.11 to $1.17 per share, and revenue between $30.7 and $31.2 billion factoring in net interest income and deposit costs, plus a smaller markets contribution. Fee income and expense trends matter more if NII is stable.

Morgan Stanley (MS) is the wealth-and-markets counterpart to Goldman. Equities and prime brokerage have been strong; advisory is the swing factor. Like Goldman, it is more exposed if deal fees come in light.

Net interest income should still grow year over year, helped by loan growth (especially commercial) and deposit mix, but the rate of improvement has slowed. Credit quality has stayed resilient in recent quarters. Any uptick in card, commercial real estate, or non-bank financial delinquencies would get attention.

It works like this. Market revenue is the upside risk, and investment-banking fees are the downside risk. AI-related financing and hedge-fund borrowing have supported trading and some lending. Morningstar and others have flagged that investment banking and trading revenues look tired and valuations are no longer cheap.

Capital return is a secondary focus featuring buyback pace at Citi and JPMorgan and whether anyone tightens guidance on 2026 net interest income or expenses.

Oppenheimer’s view is the cautious take. Plain-vanilla banking (loans, credit, costs) is fine, but capital-markets revenue is tracking toward the low end of expectations. This means that only JPMorgan is favored to beat, and Wells Fargo is expected to match.

That’s all for now. The stock market will be open on Monday which is Columbus Day, but many schools and offices are closed. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on October 6th, 2026 at 7:18 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.