To The Moon

Bank Stocks Start 2026 Strong

Why bank stocks have been leading again

Banks are basically a "macro bundle" in one ticker: growth, rates, credit, and market activity.

What has gone right recently is the combo platter:

Rates stayed high enough for long enough to keep net interest income resilient, even as investors began to price in eventual cuts. That "not too hot, not too cold" rate path matters more to banks than the absolute level.

Credit has not cracked in a way that forces a big spike in provisions, so earnings have looked "boringly dependable," which the market tends to reward when the tape gets crowded in more fragile narratives.

Capital markets woke up: underwriting calendars and deal chatter have improved, and early 2026 issuance activity has been busy, which tends to flow through to the fee engines at $Morgan Stanley(MS)$   and $Goldman Sachs(GS)$  .

Capital rules and oversight are a swing factor: even the perception of a friendlier regulatory trajectory can expand the "return of capital" narrative (buybacks and dividends), which the market prices fast. 

Financials finished 2025 up about 14.9% and have started 2026 positive, while tech is also positive early in the year, by a touch less in the snapshots above.

What the market expects for Q4

This week effectively opens the Q4 earnings season for the market, and expectations for the "big six" ( $JPMorgan (JPM.US)$ / $Bank of America (BAC.US)$ / $Citigroup (C.US)$ / $Wells Fargo & Co (WFC.US)$ / $Morgan Stanley (MS.US)$ / $Goldman Sachs (GS.US)$ ) are not low. Based on the consensus figures, the group is penciled in for roughly mid-single-digit revenue growth and high-single-digit EPS growth on average, with dispersion by business mix.

If those numbers feel "too smooth," that is the point: consensus is assuming Q4 is fine, not fabulous, not fragile.

What really matters this earnings week

Investors will pretend this is about headline beats and misses. It is not. The real tell is in four questions:

First, is net interest income stabilizing without a hidden cost? Watch deposit costs, loan yields, and guidance language. A bank can "win" NII in the quarter and still lose the stock if management hints the next few quarters get tougher.

Second, do provisions stay boring? Any surprise uptick in provisions, especially tied to consumer credit or commercial real estate, will get more attention than a small revenue beat.

Third, are the fee engines finally accelerating? For $Morgan Stanley (MS.US)$ and $Goldman Sachs (GS.US)$ , the market wants proof that the capital markets thaw is translating into durable advisory and underwriting momentum. Recent results from peers and the broader deal backdrop suggest the cycle is improving, but the question is how much is already in the price. 

Fourth, do we get a clean capital return story? Buybacks, dividend posture, and any commentary about capital requirements can swing sentiment quickly, especially for the largest banks.

– $JPMorgan (JPM.US)$ : The "quality compounder" will be judged on whether it can keep steady growth without creeping credit or expense surprises.

– $Bank of America (BAC.US)$ : The core question is how fast NII improves as pricing and funding costs normalize, because the stock trades like a rate sensitivity instrument.

– $Citigroup (C.US)$ : Investors want evidence that the multi-year simplification is translating into a cleaner earnings profile and better returns on capital.

– $Wells Fargo & Co (WFC.US)$ : With the Fed having lifted the long-running asset cap, the market will focus on whether growth optionality finally turns into measurable momentum. 

– $Morgan Stanley (MS.US)$ : Wealth and markets stability are the baseline, but the upside case is a clear pickup in investment banking and equity activity.

– $Goldman Sachs (GS.US)$ : The bar looks comparatively lower with consensus implying a YoY EPS decline, so any upside in dealmaking and underwriting could create the sharpest positive surprise.

The biggest "expectations gap" maybe belongs to $Goldman Sachs (GS.US)$ . Not because it is the safest, but because the consensus setup is the least demanding on earnings, while the capital markets backdrop has been improving. 

The weekend wildcard: Trump's 10% credit card rate cap idea

Trump's call for a one-year 10% cap on credit card interest rates is the kind of headline that can spook the whole financial complex, even if implementation is uncertain. Reuters reported the proposal without details on enforcement, and analysts have emphasized a cap would likely require legislation and face heavy resistance.

Current average credit card APRs are around 19% to 20%, so a 10% cap would be a big mechanical hit to revolving balance economics if it actually became policy. Banks with larger credit card portfolios, such as $JPMorgan (JPM.US)$ and $Citigroup (C.US)$ , would face the most direct earnings pressure if such a cap were enacted.

Summary

This week is less about whether Q4 was "good," and more about whether 2026 guidance keeps the bank rally intellectually honest: stable credit, steady NII, and a real fee cycle. If those three hold, banks can keep grinding higher even without heroic macro. If one breaks, the market will punish the weakest balance sheet narratives first, and the most rate-sensitive earnings streams right after.

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