JPMorgan, Goldman Sachs, Citigroup and Wells Fargo post strong profits, but warn rising interest rates and ‘sticky inflation’ will bite

Wall Street’s biggest banks reported another strong quarter on Tuesday, as the U.S. consumer continues to pay their bills and businesses keep investing heavily in AI.

But even as JPMorgan Chase , Citigroup , Wells Fargo and Goldman Sachs reported higher profits from a year ago, they warned about the long-term impact of higher interest rates as well as the impact higher prices could have on the consumer if inflation is not brought under control.

JPMorgan posted a $15.3 billion profit in the third quarter, or $5.57 a share, up from $14.4 billion or $5.07 a share, in the same period a year earlier.

The results missed analysts’ expectations, with Wall Street looking for the bank to earn $5.93 a share.

It was a rare earnings miss for JPMorgan and its CEO, Jamie Dimon.

The last time the bank missed analysts’ expectations was nearly three years ago.

The investment banking division of JPMorgan was to blame this quarter, as its fixed income trading desks saw a slowdown in activity compared to both earlier this summer as well as last year.

Still, shares rose 0.8% in early trading.

“The U.S. economy continued to be fueled by strong business investment and ongoing consumer spending,” Dimon said in a statement.

“However, large fiscal deficits, sticky inflation, elevated asset prices, rising interest rates and geopolitical conditions continue to shift under the surface.” The big banks typically kick off the quarterly earnings season, and this is a key one for the stock market given that robust corporate profits have helped propel the S&P 500 to record levels.

Analysts expect companies in the S&P 500 to deliver overall growth of nearly 30% in earnings per share from a year earlier, according to data provider FactSet.

If they’re correct, it would be the third consecutive quarter of growth that exceeds 25%.

Goldman Sachs, whose third-quarter profits rose sharply due to a sharp rise in stock-trading revenue, also reported that its bond trading activity slowed last quarter.

The bank posted a profit of $5.29 billion, or $17.01 a share, compared to $4.1 billion, or $12.25 a share, a year earlier.