Every January, something electric runs through the financial markets. It’s not just the post-holiday quiet returning to normal—it’s the moment when the real report cards come out. Companies that spent the last three months navigating holiday shopping surges, interest rate moves, geopolitical headlines, and their own internal strategies finally reveal how they actually performed. And traditionally, the big banks throw the first pitch.
This year feels especially significant. After months of economic data that has, frankly, surprised to the upside, investors are hungry for confirmation. Did the resilient consumer, the stubborn labor market, and surprisingly robust services activity actually translate into stronger-than-expected profits? The answers start rolling in this week, and they begin with the names most sensitive to the macroeconomic environment: our largest financial institutions.
Why the Banks Matter So Much at the Start of Earnings Season
There’s a reason we pay such close attention when the money-center banks speak. They touch virtually every corner of the economy. When businesses borrow to expand, when consumers finance homes and cars, when traders move billions across markets—these activities flow through the balance sheets of JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley, and their peers. Their results serve as an early macroeconomic barometer.
More importantly perhaps, these institutions tend to be very good at reading the room. Management teams spend their days speaking with thousands of corporate clients, monitoring credit trends, watching deposit flows, and gauging risk appetite across asset classes. When they talk about the outlook, the market listens—intently.
So let’s dive into what we might expect from the opening act of this earnings season, the major banks reporting over the next few days.
Tuesday: JPMorgan Chase & Delta Air Lines Set the Tone
JPMorgan usually goes first, and for good reason. It’s the largest U.S. bank by assets, has the most diversified business model, and CEO Jamie Dimon remains one of the most closely watched voices on Wall Street.
Analysts are looking for modest earnings growth compared with the same period last year. Nothing spectacular, but steady. What has many observers cautiously optimistic is the way the bank prepped the street last quarter—issuing a notable expense warning that actually seems to have reduced uncertainty rather than increased it. Sometimes telling the market the tough news early can take the sting out of the actual report.
One veteran bank analyst recently summed it up perfectly: “The expense revelation has de-risked the story heading into the print. Most investors now feel the hard part is already known.”
Across town at Delta Air Lines, the picture looks quite different. After delivering surprisingly strong guidance last quarter fueled by premium travel demand, expectations have come back down to earth. Wall Street is bracing for a meaningful year-over-year earnings decline. Yet some analysts remain bullish, recently raising price targets and pointing to the airline’s demonstrated earnings resilience. Will Delta surprise to the upside again, or finally give in to higher costs and softer comparisons?
Wednesday: Bank of America and Citigroup Step Up
Bank of America has quietly put together an impressive streak. It hasn’t missed Wall Street estimates since mid-2022. That’s more than two and a half years of consistent execution. Investment banking fees jumped dramatically last quarter, and many expect continued momentum. One prominent analyst recently upgraded the stock to a buy rating, arguing that current valuations look attractive compared to the earnings power the bank is demonstrating.
Citigroup’s story is perhaps the most fascinating of the group. After years of restructuring, management finally appears to be hitting its stride. Every major business line posted record revenue last quarter—an extremely rare feat for a bank of Citi’s size and complexity. Expectations call for earnings growth north of 20% year-over-year. Several analysts have raised targets in recent days, citing continued strength in net interest income and early signs of momentum in capital markets activity.
- Strong balance sheet growth
- Favorable reinvestment environment for the securities portfolio
- Improving efficiency metrics
- Capital return potential
These factors have some observers wondering whether Citi might be transitioning from turnaround story to genuine growth story in the eyes of the market.
Thursday: The Investment Banking Heavyweights – Morgan Stanley & Goldman Sachs
Both Morgan Stanley and Goldman Sachs derive substantial revenue from investment banking and trading—businesses highly sensitive to market conditions and investor sentiment. After a very strong third quarter for both firms, the fourth quarter outlook is more mixed.
Morgan Stanley enters the report having run up significantly over the past six months. Wealth management trends have been positive, investment banking activity has normalized, and excess capital provides flexibility. Yet the question lingers: can the stock continue to climb after such a strong run, or is a pause (or pullback) more likely regardless of the actual print?
Goldman Sachs faces perhaps the most challenging setup of the major banks. Consensus calls for a slight decline in year-over-year earnings—the only major bank looking at negative growth. Equity and debt underwriting activity apparently slowed more than expected, private banking net interest income softened, and compensation costs may come in higher than anticipated. Still, Goldman has beaten expectations for nine consecutive quarters. History suggests investors shouldn’t count them out just yet.
What the Broader Economic Data Tells Us
One reason for cautious optimism across the banking sector is the recent economic data. December’s employment report showed the unemployment rate ticking down—a rare occurrence when expectations were for stability or slight deterioration. The services sector purchasing managers index came in stronger than anticipated, signaling continued expansion rather than the slowdown many had feared.
These data points matter because banks are essentially economic mirrors. When businesses feel confident enough to borrow for expansion, when consumers continue spending on homes, cars, and credit cards, when trading activity remains elevated—banks tend to do well. The recent macro resilience gives analysts some room to hope that the banking sector might deliver better-than-feared results.
But let’s be realistic. Markets have already priced in quite a bit of good news. Valuations across financials aren’t exactly cheap anymore. Expectations have crept higher over the past month. That means the bar is set fairly high, and any whiff of disappointment could trigger meaningful reactions—both positive and negative.
Key Themes to Watch Across Bank Reports
Beyond the headline numbers, several underlying trends will likely dominate the conference calls and subsequent analysis:
- Net interest income trajectory – has the pressure on margins finally stabilized?
- Expense control – can banks continue to manage costs in a higher-for-longer rate environment?
- Credit quality – are signs of consumer stress emerging in credit card or auto loan delinquencies?
- Capital markets activity – is the investment banking recovery sustainable?
- Forward guidance – what are CEOs saying about the first half of the new year?
The answers to these questions will likely determine whether we get a “risk-on” earnings season or a more cautious tone for the months ahead.
My Personal Take: Why This Season Feels Different
I’ve followed earnings seasons for quite a few years now, and something about this one feels… different. There’s less of the usual pre-earnings anxiety. Markets haven’t sold off aggressively into the reporting period. Volatility is relatively subdued. Perhaps it’s because so much bad news was priced in throughout 2022 and 2023 that the absence of disaster already feels like victory.
Or maybe it’s simply that the economy has refused to follow the recessionary script so many had written. Whatever the reason, the mood feels cautiously optimistic rather than defensively pessimistic. That’s a meaningful change from recent years.
Will the banks validate that cautious optimism? Or will we get the classic “good news is bad news” reaction where solid results are greeted with selling because expectations were too high? That’s the drama we’ll all be watching over the next several days.
One thing is certain: the opening act of earnings season rarely disappoints from a volatility standpoint. Whether the news is good, bad, or mixed, markets tend to react forcefully to the first real data points of the year. Buckle up—this week’s reports could set the tone not just for the rest of earnings season, but for the direction of financial stocks and perhaps the broader market in early 2026.
Whatever happens, one thing remains true: in the world of investing, nothing focuses the mind quite like actual results. And those results start hitting the tape this week.
Stay tuned. The show is just beginning.
