Big banks stumble as Wall Street momentum slows

Wall Street hit a rough patch this week as America’s biggest banks reported weaker-than-expected earnings.

For months, markets had thrived on a “K-shaped economy,” where wealthy customers kept spending while others struggled. But this quarter showed cracks in that trend.

Bank of America, Citi, JPMorgan Chase, and Wells Fargo all missed expectations, sending their stocks lower. 

Problems ranged from delayed deal activity to rising costs and slower growth.

Bank of America topped fourth-quarter earnings expectations but unsettled investors with conservative income guidance. Wells Fargo fell short of analysts’ estimates due to weak mortgage lending and severance payments to employees it let go.

JPMorgan posted a 4% decline in quarterly dealmaking revenue amid delayed mergers and reported a drop in full-year profit.

Citigroup saw its quarter’s expenses climbing 6%.

Banks that mainly serve wealthy clients, such as Goldman Sachs and Morgan Stanley, performed better by comparison.

Politics also entered the picture. Executives warned that a proposed 10% cap on credit card interest could reduce lending, especially to riskier borrowers. JPMorgan’s finance chief said such a move would hurt bank profits.

Still, the outlook isn’t all negative. Trading revenue improved, dealmaking picked up, and major bank stocks remain well above where they stood a year ago.