Bank of America Misses, Morgan Stanley and BlackRock Beat as Wall Street Waits on Inflation

NEW YORK

Earnings season gave Wall Street a split screen on Wednesday morning. The country's second-largest bank stumbled, its deal-making rival cleared the bar comfortably, and the world's largest money manager posted the kind of quarter that makes an index look cheap — all of it landing in the hour before the inflation number that will matter more than any of them.

Bank of America reported adjusted earnings of $1.08 a share for the third quarter on revenue of $30 billion, MarketWatch reported, short of the $1.10 a share on $30.58 billion that analysts polled by FactSet had expected. The adjusted figure stripped out a charge of 17 cents a share connected to a settlement with the United States Treasury Department over the bank's money-laundering controls, announced on Tuesday; the bank had also disclosed a regulatory fine of about $1.21 billion that weighed on the quarter. Investors did not wait for the footnotes. The shares dropped about 4 percent as the numbers crossed, the weakest reaction of the big-bank reporters so far this week, after falling 1.5 percent in premarket trading when the fine was first digested.

Underneath the miss, the lending business looked steadier than the headline. Net charge-offs — loans the bank does not expect to recover — held at $1.35 billion, down from $1.41 billion in the second quarter and $1.37 billion a year earlier. That stability matters to the wider market, because Bank of America's card and consumer books are one of the cleanest reads on whether American households are starting to crack under high interest rates. On Wednesday's evidence, they are bending but not breaking.

Morgan Stanley's Trading Desks Did the Heavy Lifting

Morgan Stanley told the opposite story. Profit rose 7 percent from a year earlier to $3.03 a share, The Wall Street Journal reported, beating the $2.93 a share analysts had forecast, and revenue climbed 12 percent to $20.34 billion against expectations of $19.93 billion. The engine was trading: equities revenue surged 41 percent to $5.79 billion in a quarter when volatile, record-setting markets kept institutional clients dealing. Wealth management — the steadier business the bank has spent a decade building — set a record at $9.07 billion of revenue, up 10 percent. Investment banking revenue edged up 2 percent to $2.16 billion, while fixed-income trading revenue fell 7 percent to $2.01 billion. The firm also reported a return on tangible common equity of 22.6 percent, a level most rivals do not reach in their best years.

BlackRock Now Manages Half an Economy

BlackRock, reporting alongside the banks because its results move markets the same way, beat by the widest margin of the morning. Adjusted earnings rose 38 percent to $15.93 a share, MarketWatch reported, well above the $14.32 analysts expected, on revenue up 19 percent to $7.75 billion against forecasts of $7.42 billion. On a standard accounting basis, Reuters reported, profit was $1.66 billion, or $10.57 a share, up from $1.32 billion and $8.43 a share a year earlier. Assets under management climbed 15 percent to $15.49 trillion — a figure roughly half the size of the entire United States economy — powered by $205 billion of net inflows in the quarter, $135 billion of it into the firm's low-cost iShares exchange-traded funds. The assets figure narrowly missed the $15.52 trillion consensus, the only soft spot in the report, and the shares rose more than 3 percent before the bell. Chief executive Larry Fink said the firm was heading into its seasonally strongest quarter with momentum building across private markets, retirement and its international platforms.

Everything Now Waits for 8:30

For all the ink the banks generated, traders were explicit that Wednesday's real event arrives at 8:30 a.m. Eastern, when the Labor Department publishes the September consumer price index. Economists polled by Dow Jones and Reuters both expect headline inflation to have accelerated to 3.6 percent from a year earlier, up from 3.4 percent in the previous reading, with core prices rising 0.2 percent on the month. A softer print would support the argument that the Federal Reserve can pause its tightening; a hotter one would revive talk of another increase. New York Fed president John Williams has said the central bank may need to raise rates once more this year to slow inflation, though not in 2027, and futures markets on Wednesday morning put the chance of a quarter-point rise at next week's meeting at roughly 22 percent. Richmond Fed president Tom Barkin is scheduled to speak later in the day, and the Fed's Beige Book survey of regional conditions follows in the afternoon.

The premarket tape reflected that holding pattern. At 5:41 a.m. Eastern, Reuters reported, Dow futures were up 234 points, or 0.45 percent, S&P 500 futures were up 0.21 percent and Nasdaq 100 futures were fractionally lower, a day after the major indexes closed slightly in the red — the S&P 500 down to 7,805, the Dow off 0.35 percent and the Nasdaq Composite down 0.15 percent. Oil remained the market's second anxiety: West Texas Intermediate futures rose nearly 2 percent to about $95.90 a barrel as attacks across the Middle East continued, while Brent crude had already topped $106 after a strike on a Saudi Aramco building. Gold eased to about $4,160 an ounce, bitcoin was little changed near $83,500, and the 10-year Treasury yield sat at 5.20 percent, just below last week's two-decade high of 5.37 percent.

Chip stocks added their own cross-current. Memory makers extended a recent slide on worries about competition from Chinese manufacturers — Intel and Micron each fell more than 1 percent before the open while Nvidia inched higher — even as Dutch equipment giant ASML told investors that AI demand will outrun its supply in 2027 and 2028. It is the defining tension of this earnings season, visible across this morning's results and the overnight reports from China's export surge and Singapore's forecast-beating growth: the technology build-out is producing real, enormous numbers, while the cost of money — set by inflation prints like the one due at 8:30 — decides how much investors are willing to pay for them. Bank of America's fine-driven miss will be forgotten by Friday if the inflation number cooperates. If it does not, Wednesday morning will be remembered as the moment the market stopped grading the banks and started grading the Fed.