Financial Sector Hits Record Highs As Goldman Sachs, Bank of America, Citi Beat Q3 Earnings Expectations

A basket of major U.S. bank stocks, as measured by the Financial Select Sector SPDR Fund (NYSE:XLF), is poised to extend its record highs following a wave of strong third-quarter earnings reports.

The fund rose nearly 0.7% in premarket trading, continuing its upward momentum from last week's rally. Gains also spilled over to regional banks, as SPDR S&P Regional Banking ETF (NYSE:KRE) rose 0.5%.

On Tuesday, top financial firms including Goldman Sachs Inc. (NYSE:GS), Bank of America Corp. (NYSE:BAC), Citigroup Inc. (NYSE:C), and Charles Schwab Corp. (NYSE:SCHW) all exceeded analyst expectations, reinforcing investor confidence in the sector's health.

Goldman Sachs Q3 2024: Major Revenue Beat Drives Stock To Record Highs

Goldman Sachs posted a robust third-quarter performance, significantly beating Wall Street's earnings estimates. The bank reported earnings per share (EPS) of $8.40, surpassing the expected $6.88. Revenue came in at $12.7 billion, topping the $11.7 billion consensus estimate, with standout results in several key segments.

• Equities sales & trading revenue surged to $3.5 billion, well above the $2.95 billion estimate.
• Global banking and markets net revenue hit $8.55 billion, beating the forecast of $7.65 billion.
• Total deposits grew 2.8% quarter-over-quarter to $445 billion.
• Assets under management (AUM) reached $3.1 trillion, exceeding expectations of $2.99 trillion.

Stock Reaction: Shares of Goldman Sachs jumped nearly 3% in premarket trading, reaching a new record high of $537.50.

Read also: Goldman Sachs Q3 Earnings: Investment Banking Fees Surges 20%, Asset & Wealth Management Up 16%, But Fixed Income Falters

Bank of America Q3 2024: Solid Growth in Investment Banking and Trading

Bank of America also delivered a strong set of earnings, with an EPS of $0.81, beating the $0.76 consensus. Revenue totaled $25.34 billion, slightly above expectations of $25.25 billion, driven by solid growth in its investment banking and trading operations.

• Net interest income (NII) rose to $13.97 billion, surpassing the $13.9 billion forecast.
• Investment banking revenue reached $1.4 billion, exceeding the $1.24 billion estimate.
• Trading revenue, excluding debt valuation adjustments, hit $4.94 billion, beating the $4.57 billion consensus.

Richard Ramsden, equity analyst at Goldman Sachs, indicated that Bank of America delivered “another well-rounded beat,” highlighting that NII was 0.5% above the Street due to higher earning assets, loans, and trading balances.

Stock Reaction: Bank of America shares climbed 2% to $42.79 following the earnings report.

Citigroup Q3 2024: Strong Gains in Trading and Wealth Management

Citigroup outpaced analyst expectations, reporting an EPS of $1.51, beating the consensus of $1.31. Revenue for the quarter came in at $20.32 billion, ahead of the $19.86 billion estimate.

• FICC sales & trading revenue reached $3.58 billion, in line with forecasts, while equities sales & trading revenue surged to $1.24 billion, far above the $1.03 billion estimate.
• Wealth management revenue was a bright spot, hitting $2 billion compared to the $1.8 billion forecast.
• Markets revenue totaled $4.82 billion, topping estimates of $4.6 billion.

Citi's investment banking revenue also surpassed expectations, coming in at $934 million versus the anticipated $874.5 million. This marks a solid quarter for Citigroup as it continues to streamline operations while growing its core business lines.

Stock Reaction: Citigroup shares rose 2.4% to $67.50, reaching levels not seen since mid-July.

Charles Schwab Q3 2024: Shares Skyrocket On Earnings Beat

Charles Schwab also joined the list of financial firms delivering upbeat Q3 results. The company reported an EPS of $0.77, exceeding the $0.75 consensus, with revenue of $4.847 billion, just above the $4.786 billion estimate.

This marks a strong recovery for Schwab, which faced pressure earlier this year. The bank benefited from steady client engagement and favorable market conditions.

Stock Reaction: Charles Schwab shares rocketed 9% to $73.78 in premarket trading, putting the stock on track for its best session since July 2023.

Read more:

• Wall Street On Edge As Nasdaq Nears Record High, Oil Prices Plummet: Strategist Says There’s Opportunity If Resilience Continues

Image created using artificial intelligence via Midjourney.