The third-quarter earnings season for U.S. banks is in full swing with Goldman Sachs Group, Inc. GS set to report its third-quarter financial results on Tuesday before the opening bell. 

JP Morgan, Wells Fargo Set The Stage

The major banks' earnings season kicked off last Friday with JP Morgan & Co. JPM and Wells Fargo & Co. WFC both reporting better-than-expected earnings in the third quarter. JP Morgan saw its revenues rise 6% year-over-year to $43.3 billion, fueled by investment banking fees that grew 31%. Wells Fargo posted stronger-than-expected earnings per share of $1.42, exceeding the $1.28 consensus estimate. 

Read Next: US Banks Top Q3 Earnings Estimates: JPMorgan Delivers ‘Robust Beat,’ Financial Sector Stocks Hit Record Highs

Interest Rates

The Federal Reserve cut interest rates by 50 basis points in September and signaled the potential for further reductions in the near future.

Morgan Stanley economists anticipate an additional 150 basis points of rate reductions by mid-2025 and view rate cuts as advantageous for large-cap banks sensitive to liabilities. The largest banks, including Goldman Sachs, also have significant revenue exposure to capital markets and will likely see fee income growth in a lower-rate environment. 

Goldman Sachs Q3 Expectations

According to estimates from Benzinga Pro, the Street expects Goldman Sachs to report quarterly earnings of $7.03 per share and revenue of $11.868 billion on Tuesday. Goldman Sachs has beat analyst expectations on the top and bottom lines in each of its last four quarterly reports. 

GS Price Action: According to Benzinga Pro, Goldman Sachs shares are up 1.09% at $521.95 at the time of publication Monday.

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