Wall Street Lunch: Big Banks Fall Despite Upbeat Earnings

Big banks were met with a sell-the-news reaction as earnings season got underway.

Listen below or on the go on Apple Podcasts and Spotify Big banks earnings underway (0:20) IBM warning sends panic to software, consulting stocks (0:58) CPI cooler than expected as energy prices recede (2:00) Wonder IPO (2:58) Retail investor activity remains elevated in 2026 (3:45) This is an abridged transcript of the podcast: Our top story so far, big banks were met with a sell-the-news reaction as earnings season got underway. JPMorgan Chase (JPM) came under early selling pressure on concerns about rising expenses, despite topping forecasts and raising its full-year outlook for net interest income.

Bank of America (BAC) and Wells Fargo (WFC) also traded lower despite beating expectations, while Citigroup (C) hovered around the flatline. Goldman Sachs (GS) was a notable exception, helped in part by the SpaceX (SPCX) IPO. Revenue easily topped forecasts, driven by a 55% year-over-year jump in investment banking fees.

Among other active stocks, IBM (IBM) unexpectedly warned that second-quarter revenue would miss estimates, sending software and consulting stocks sharply lower. IBM shares plunged more than 20% after CEO Arvind Krishna said customers shifted spending in the final weeks of June toward servers, storage and memory. ServiceNow (NOW), Salesforce (CRM), Adobe (ADBE), Workday (WDAY), HubSpot (HUBS), Datadog (DDOG) and Microsoft (MSFT) all fell in response.

Consulting stocks also came under pressure, with Accenture (ACN) and Cognizant Technology Solutions (CTSH) both trading lower. Looking to the economy, retail inflation came in surprisingly cool. The Consumer Price Index rose 3.5% year over year in June, below the 3.8% consensus and down from 4.2% in May.

On a monthly basis, CPI fell 0.4%, compared with expectations for a 0.1% decline. Lower energy prices were the biggest driver. The energy index fell 5.7% in June after rising in each of the previous three months.

Core CPI, which excludes food and energy, was flat for the month, versus expectations for a 0.2% increase. On an annual basis, core inflation slowed to 2.6% from the 2.9% consensus. Seeking Alpha analyst Justin Purohit said lower gasoline prices "did the heavy lifting, and with oil climbing again, inflation's recent improvement could prove short-lived."

He continues to favor "a defensive, selective approach" to investing, saying inflation remains the key macro theme and the odds of tighter Fed policy continue to rise. In other news of note, food delivery and mealtime super app Wonder is aiming to become the "Amazon of food." The AI-powered platform is racing toward an IPO with a rapid expansion of physical locations and a string of major acquisitions.

The company is targeting a valuation of about $9B. Wonder recently hired Gabrielle Rabinovitch as CFO to help prepare the company for an initial public offering, which could come as soon as 2027. The focus is on building the infrastructure, leadership and governance needed to be IPO-ready. CEO Marc Lore has said he wants Wonder to generate about $5B in annual revenue before its Wall Street debut.

He also said the company plans to introduce quarterly-style earnings calls and formal compensation structures in 2027 as part of its IPO preparations. And in the Wall Street Research Corner, Vanda Research says retail investors are becoming more selective about where they put their money and more willing to trim positions and lock in gains. Vanda noted that weekly net purchases of individual stocks recently fell to their lowest level since the Covid-era selloff.

But overall retail trading activity remains exceptionally strong, ranking in the 99.7th percentile on a one-month rolling basis. The biggest