S&P 500: bank earnings face a test at record highs
Published on October 13, 2026
The S&P 500 closed Monday at 7,807, just twelve points below its record close. What happens next rests on bank earnings, with four of the biggest US lenders reporting before the bell on Tuesday. The timing is awkward, because memory chips are selling off again in Asia and dragging the Nasdaq with them.
The indexes are pulling apart
The Dow Jones gained 195 points (+0.38%) on Monday to 51,850. The S&P 500 gave up 4 points and the Nasdaq composite fell 0.44% to 27,246, held down by memory chip makers. The bond market was shut for Columbus Day.
Futures tell the same story this morning. The S&P 500 contract is off 0.1%, the Nasdaq 100 contract is off 0.2%, and the Dow is a few points higher, according to IC. Money is leaving tech and looking for another engine. The banks report at exactly the right moment to become one.
Why bank earnings matter this much
JPMorgan, Goldman Sachs, Citigroup and Wells Fargo report around 7:00 am ET. LSEG consensus looks for $5.94 a share at JPMorgan against $5.07 a year earlier, $12.44 at Goldman Sachs, $2.41 at Citigroup and $1.85 at Wells Fargo. Profits at the largest lenders are seen rising as much as 20% from a year ago, according to Reuters.
The market is not really watching profits, though. It is watching the 10 year yield. Long rates have climbed to levels not seen in more than twenty years, and traders want to know whether that pushes deposit costs through the roof. The KBW Bank Index has already lost 13% from its August peak close and 6% over the quarter.
Cheryl Pate, senior portfolio manager at Angel Oak Capital Advisors, sounds relaxed about it: "We don't expect any big deposit flows with customers looking for higher yields or any drastic rise in deposit costs." UBS analyst Erika Najarian told clients that financials need three things to recover: a solid capital markets pipeline, loan growth on track, and deposit costs under control.
Chips are pulling the other way
The Kospi fell more than 6% overnight and dropped back below 6,000, its lowest since July 31. The Nikkei lost about 2%. Chinese competition in memory chips and fresh doubts about AI spending hit SK Hynix, Samsung, Kioxia and Tokyo Electron, according to CNBC.
The trouble is how few stocks the S&P 500 record rests on. Only 34% of the index members hold above their 50 day moving average, and 48% above the 200 day, according to FXStreet. If the banks do not take over today, the index runs out of names to carry it. Handling a split session like this is one of the habits that decides a prop firm challenge.
Key levels today
| Instrument | Level (support / resistance) | Change (Monday close) | Scenario / What to watch |
|---|---|---|---|
| S&P 500 | Resistance 7,819 (record close of October 7), support 7,800 | -0.06% at 7,807 | A close above 7,819 takes the record. Below 7,800 the index slides back toward the 7,765 area |
| Nasdaq composite | Support 27,193 (closing low of October 8) | -0.44% at 27,246 | Below 27,193 the chips take the whole index down. Above 27,366 the pressure fades |
| US 10 year yield | Resistance 5.31% (highest since May 2002) | 5.19%, against 5.26% on Friday | A move back to 5.31% hurts banks and indexes. Below 5.15% tech gets room to breathe |
Economic calendar
- Tuesday 7:00 am ET: JPMorgan, Goldman Sachs, Citigroup and Wells Fargo. If investment banking revenue beats, the Dow and financials take the baton from tech. If it misses, the S&P 500 stays stuck under its record.
- Tuesday 10:00 am ET: US existing home sales. A weak number is a reminder that long rates are biting the real economy, and it can pull the 10 year lower.
- Wednesday 8:30 am ET: September US CPI, seen at 3.7% year on year against 3.4% the month before, according to Admiral Markets. Above 3.8% a rate hike comes back on the table for the October 27 and 28 meeting and the indexes break down. At 3.6% or below, the S&P 500 has a clear path.
- Wednesday before the open: Bank of America and Morgan Stanley. Management has already flagged investment banking fees falling at least 10%.
The bottom line
The S&P 500 sits twelve points from a record and it is short of an engine, because the chips have quit. Tuesday's bank earnings decide whether financials can take that job before Wednesday's inflation print.
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This is not investment advice. Informational content only.