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JPMorgan falls as slower dealmaking leads to a profit miss
JPMorgan Chase shares fell after the bank missed third-quarter profit and revenue forecasts. The bank cited slower dealmaking and weaker bond trading. Its chief executive warned about inflation and rates.
Quick Read
- JPMorgan shares fell 0.9% after third-quarter profit and revenue missed analyst forecasts.
- The bank said slower dealmaking and weaker bond trading weighed on results.
- Consumer banking, equity trading and wealth management grew, and the finance chief called consumer spending strong.
- Jamie Dimon warned about inflation, rising rates and economic risks ahead of the Oct. 14 inflation report.
What did JPMorgan report?
JPMorgan Chase (NYSE: JPM) shares fell 0.9% on Tuesday to $331.43, down from $334.30. The bank's third-quarter profit and revenue both came in below the consensus, the average analyst forecast.
Why it matters: Revenue still grew from a year earlier, and net income rose as well. Both measures nonetheless fell short of what analysts had expected.
Losses on investment securities trimmed earnings in the quarter. Operating expenses also rose, adding to the pressure on profit.
Why did the shares fall?
The bank said slower dealmaking and weaker bond trading weighed on results. Reports linked both to uncertainty in markets. Revenue from fixed-income markets, which covers trading in bonds and similar assets, declined.
Chief executive Jamie Dimon also warned about inflation, rising interest rates and wider risks to the economy. Those comments came from the leading U.S. bank for retail deposits.
Other bank stocks were weaker too. The financial sector fund XLF fell 0.4%.
Was there any good news in the results?
Several parts of the business grew. Consumer and community banking revenue rose, card spending increased and average deposits grew, the bank reported.
Equity trading revenue rose strongly and offset part of the decline in bond trading. Investment banking fees and asset and wealth management revenue also increased.
Chief financial officer Jeremy Barnum said underlying consumer spending remained strong. He described the pipeline of investment banking deals as strong. He said deals were more likely to be delayed than canceled.
What comes next?
What’s next: Other large banks report results this season. Dimon's warnings could shape how they discuss lending and borrowing costs.
The September consumer price index, a monthly inflation reading, is due Wednesday, Oct. 14, at 8:30 a.m. ET. The Fed announces its next interest-rate decision on Oct. 28 at 2 p.m. ET. Both may bear on the inflation and rate concerns Dimon raised.
For readers
What it could mean for you: People who own JPMorgan shares directly carry the full effect of this report, with no other holdings to soften it. A key question for them may be whether the dealmaking slowdown proves temporary. The finance chief suggested it might, saying deals were more likely delayed than canceled. A pickup in deals could support fee income, while a longer pause might weigh on it. Dimon's warnings about inflation and rates could also matter for the bank's borrowing costs and loan quality.
Questions and answers
Why did JPMorgan stock fall after earnings?
The bank's third-quarter profit and revenue came in below analyst forecasts. Slower dealmaking and weaker bond trading weighed on results, the bank said.
Did JPMorgan's revenue grow?
Yes. Revenue rose from a year earlier, but it still fell short of the consensus, the average analyst forecast.
What did Jamie Dimon warn about?
The JPMorgan chief executive warned about inflation, rising interest rates and wider risks to the economy.
Is JPMorgan's dealmaking slowdown expected to last?
Chief financial officer Jeremy Barnum described the investment banking pipeline as strong. He said deals were more likely to be delayed than canceled.
The numbers
| JPMorgan Chase (JPM) price | $331.43 |
|---|---|
| JPMorgan Chase (JPM) change | −0.86% |
| S&P 500 change | −0.02% |
| 10-year Treasury yield | 5.21% |
Tuesday’s close
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Not investment advice.
