Dow Jones: Bank Earnings Lift US 30 as Powell Hints at End of Tightening

Yes. Financials led the midday recovery after several major banks posted stronger-than-expected third-quarter results. Citigroup jumped 3.4% and Wells Fargo surged 7% following solid earnings reports that reflected healthy loan demand and strong consumer activity.

JPMorgan Chase and Goldman Sachs also topped forecasts but fell more than 1% as investors reacted to guidance and margins. Still, the sector’s performance helped steady broader sentiment after a volatile start to the week.

What Sparked the Early Selloff?

U.S.-China tensions flared after China sanctioned five U.S.-linked subsidiaries of South Korea’s Hanwha Ocean, barring Chinese firms and individuals from conducting business with them. The move fueled fears of wider supply chain disruptions and trade retaliation.

Treasury Secretary Scott Bessent criticized the sanctions, calling them a sign of China’s economic strain and suggesting Beijing is trying to drag other economies down with it. The VIX spiked above 22 in early trading, its highest since June, before pulling back under 21.

What Did Powell Say About the Fed’s Path Forward?

Fed Chair Jerome Powell told economists that the central bank is nearing the end of its balance sheet runoff, signaling a potential shift in tightening policy. While Powell gave no new guidance on interest rates, he noted liquidity conditions are tightening, which could lead to halting balance sheet reductions soon.

He also defended the Fed’s ability to pay interest on reserves, warning that removing that authority would limit its control over monetary policy. Powell reiterated that the labor market appears to be softening, though risks to inflation remain.