To The Moon

If you think US banks are still winners in 2026, it needs an October update.

For starters, $Goldman Sachs(GS)$ stock ticked down slightly early Thu, 08 Oct 2026, extending a painful sell-off that has almost zeroed out 2026 gains for the storied Wall Street bank - days ahead of its Q3 2026 earnings release. (see below)

According to Yahoo Finance data:

• GS has fallen in 10 of the past 12 weeks.

• Dropping more than -20% since its July 2026 peak. (see below)

• For the year, shares were up less than 1% as of Thu, 08 Oct 2026 morning.

Prior to 08 Oct 2026's trading, shares of the investment bank had lost -13.44% lagged the Finance sector's loss of -4.09% and the S&P 500's gain of +1.4%.

The retreat comes as a dramatic reversal of investor appetite. 

The storied investment bank stood at the center of a banner first half for Wall Street, powered by unusually active markets and a wave of mega corporate deals.

H1 2026’s profits have already blown past New York City's full-year forecast, with bonuses now projected to hit another yearly high.

Compensation boutique Johnson Associates anticipates the same boom, with big banks leading.

Q3 Earnings Estimates.

US investment community will be paying close attention to GS’s earnings performance of in its upcoming release.

The company is slated to reveal its Q3 earnings on 13 Oct 2026.

Analysts are expecting GS to :

• Post an EPS of $13.35 per share, marking a +8.98% YoY growth.

• Revenue is expected to hit $16.87 billion, indicating a +11.08% upward movement from same quarter last year.

Additionally, investors should keep an eye on any recent revisions. This as latest adjustments often mirror the shifting dynamics of short-term business patterns.

As such, positive estimate revisions reflect analyst optimism about the business & profitability.

Rewards as a Guide ?

Goldman's extraordinary run over the past 5 years is also about to deliver a massive payday for its top executives.

According to a Bloomberg report, some 20 Goldman Sachs executives are set to receive more than $500 million in special equity awards later this month, with CEO David Solomon alone, stands to receive more than $100 million.

The awards, granted 5 years ago and tied to GS's performance over that period, underscore the contrast between the fortunes Wall Street's top bankers have enjoyed and the more uncertain outlook investors now see for the industry.

The sharp rise in government bond yields has:

• Raised borrowing costs.

• Threatened to complicate deals.

• Cooled demand for financing. 

The trading boom is also showing signs of fatigue as the global bond market rout has deepened.

In a September 2026 Barclays conference in New York, GS's fixed income, currencies, and commodities trading and financing operations "have been a little bit softer on a relative basis", said CEO David Solomon. 

So far, announced mergers & acquisitions deal globally also slowed sharply during the 3rd quarter, raising questions about whether 2026's investment banking surge can keep up momentum into next year. 

The stock pressure extends well beyond GS actually.

US bank stocks broadly have retreated in recent weeks as investors reassess the economic outlook amid a new era of interest rate hikes.

Investors will get a detailed look at how GS and other big banks are faring early next week as Q3 bank earnings begin reporting from Tue, 13 Oct 2026.

Since late August 2026, US bank stocks have come under pressure as bond yields climbed to multidecade highs.

US’s $KBW Bank Index(BKX)$ tracks performance of leading publicly traded US banking companies, including large national money center banks, regional banks, and thrift institutions.

It’s down -13% from its August 2026 peak close and down -6% in Q3. (see below)

The largest ​lenders' profits are still expected to rise in Q3 over the previous year:

• 13 Oct 2026 - JPM, GS, C and WFC will report their earnings.

• 14 Oct 2026 - MS and BAC will release their Q3 earnings.

Higher interest rates slowed capital markets activity late in the quarter.

Investors are focused on whether higher rates will also drive-up deposit costs and weaken credit quality.

Angel Oak Capital Advisors, Senior portfolio manager, Cheryl Pate, thinks:

• Investors will keen and look for guidance on credit ‌growth and deposit costs.

• There will not be any significant deposit flows as customers seek higher yields, nor does it anticipate any drastic rise in deposit costs

• Also, despite recent rise in interest rates, analysts do not expect banks to face the same unrealized losses on their securities portfolios that contributed to the 2023 banking crisis. This is because (a) most banks have since reduced the duration of their portfolio and (b) managed the risk.

Looking at valuation, GS is presently trading at a Forward P/E ratio of 13.21.

This is a “premium” compared to the average Forward P/E of 13.14 of its industry.

Additionally, it is observed that GS currently boasts a PEG ratio of 0.98, similar to the widely-known P/E ratio.

Difference is that PEG ratio also takes into account GS's expected earnings growth rate.

Financial - Investment Bank stocks are, on average, holding a PEG ratio of 0.89 based on 07 Oct 2026's closing prices.

Separately, in a note to clients, UBS bank analyst Erika Najarian linked bank stocks' weakness to the spike in Treasury yields and added investors will need reassurances that the capital markets pipeline remains robust, ⁠loan growth is on track and a rise in deposit costs is contained.

Investment Banking Revenue.

Investors will be on the watch for any guidance on investment ​banking ​deals, after surging bond yields contributed to initial public offering cancellations late in September.

• Eg. Smart-ring maker Oura ​and SoftBank-backed AI data center developer - SB Energy delayed their IPOs. ‌

Investors will look for news on potential deals and execution in Q4 2026 to try to predict investment banking revenue.

Cooling investment banking prospects are leading some analysts to consider whether banks with retail operations could become more attractive to investors than pure investment banks.

What Big 6 have said about Q3 earnings and what analysts expect :

• JPMorgan Chase. Expects investment banking fees and trading revenue to rise by a "mid-to-high teens" percentage, said Co-President Doug Petno, at an investor ‌conference last month.

• Bank of America. Expects investment banking fees to drop by at least ​-10% in Q3, while sales and trading revenue will be flat, said CEO Brian Moynihan in September 2026, triggering a sharp drop in its shares.

• Citigroup. CFO Gonzalo ‌Luchetti said last month the bank expects its return on tangible common ​equity to be slightly above its +11% target ​this year. For 2026, Citi will also increase the volume of stock buybacks.

• Wells Fargo. Expects loan growth this year to be better than previous forecasts and sees healthy US spending & credit trends, according to CFO, Mike Santomassimo.

• Goldman Sachs. CEO, David Solomon told investors (last month) to expect a muted Q3. Fixed income, currencies & commodities are expected to come in softer compared to a strong performance for its equities business.

• Morgan Stanley, Co-President, Dan Simkowitz said last month the bank's investment ​banking pipeline looks robust and that companies are still in the middle of the AI investment cycle.

Big 6’s EPS : Q3 2026 (estimates) vs Q3 2025 (actuals).

• JPMorgan $5.94 vs $5.07,

• Bank of America $1.10 vs $1.06

• Citigroup $2.41 vs $2.24

• Wells Fargo $1.85 vs $1.66

• Goldman Sachs $12.44 vs $12.25

• Morgan ​Stanley $2.94 vs $2.80

My viewpoints: (mine only)

Banks may still deliver solid earnings, but profitability alone will not decide whether investors reward the sector.

The real question is whether they can sustain growth in the face of :

• Borrowing costs rise.

• Dealmaking slows.

• Credit quality becomes harder to manage.

The true test of value is resilience and not momentum. Agree ?

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