TLDR
- JPMorgan stock dropped 4.2% Tuesday despite beating earnings estimates by 5%, with adjusted EPS of $5.23 versus expected $4.86
- Profits fell 7% year-over-year due to lower-than-expected investment banking fees and timing issues
- The new Apple credit card deal cost 60 cents per share as JPMorgan set up a $2.2 billion credit reserve for the portfolio purchase
- Revenue reached $46.77 billion, beating analyst expectations of $46.25 billion
- CEO Jamie Dimon criticized the Justice Department’s subpoena of Fed Chair Jerome Powell, warning it could undermine monetary policy independence
JPMorgan Chase stock took a beating Tuesday, closing down 4.2% even after reporting earnings that sailed past Wall Street expectations. The disconnect between results and reaction has investors scratching their heads.
The nation’s largest bank posted adjusted earnings per share of $5.23. That beat analyst estimates of $4.86 by a solid 5%. Revenue also topped forecasts, coming in at $46.77 billion versus the expected $46.25 billion.
But the market wasn’t impressed. Shares closed at $310 before recovering slightly to $312.22 in premarket trading Wednesday, up just 0.39%.
The problem? Profits actually fell 7% compared to last year. Investment banking fees came in lighter than analysts wanted to see. Timing issues threw off the numbers.
Then there’s the Apple situation. JPMorgan’s new credit card partnership with the iPhone maker shaved 60 cents off per-share earnings. The bank had to set aside $2.2 billion in credit reserves as part of buying Apple’s card portfolio.
Evercore ISI wasn’t fazed by the selloff. The firm kept its Outperform rating with a $350 price target. Analysts called it a “sell the news” reaction to what they described as a “decent print for a high multiple, well-loved stock.”
What’s Behind the Negative Reaction
Several factors likely spooked investors. The investment banking fee timing issues caught attention. Management commentary on loan and deposit growth came across as muted. Higher expense trends also got reiterated, which never excites shareholders.
But it’s not all doom and gloom. Management reaffirmed net interest income guidance that matches current street estimates. They maintained a positive outlook for investment banking too.
The bank expects strong client engagement heading into 2026. Management characterized the market backdrop and pipeline as “constructive.” That’s banker-speak for optimistic.
Evercore ISI concluded that JPMorgan’s long-term story remained “largely unchanged.” The firm expects the bank to keep its status as a “best-in-class operator.”
CEO Sounds Off on Fed Independence
Separately, CEO Jamie Dimon had choice words about the Justice Department’s recent subpoena of Federal Reserve Chair Jerome Powell. He warned Tuesday that the move risks undermining confidence in monetary policy independence.
That could push interest rates higher, Dimon cautioned. “I don’t agree with everything the Fed has done,” he said. But he insisted he has “enormous respect for Jay Powell, the man.”
Other major banks report earnings Wednesday. Bank of America, Citigroup, and Wells Fargo all release their quarterly results today. The sector will be watching closely to see if JPMorgan’s unusual quarter signals broader trends.
JPMorgan’s earnings represented an unusual quarter for the bank. The wider sector hopes it won’t act as a bellwether. Investors looking for reassurance might turn to BNY’s recent earnings beat for comfort.
The stock’s premarket recovery suggests some bargain hunters stepped in after Tuesday’s drop. Whether that continues depends on what the other big banks report.
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