By BLOOMBERG

NEW YORK • Investors are watching third-quarter (3Q) results from Bank of America Corp (BofA), Goldman Sachs Group Inc and Morgan Stanley today and tomorrow for further clues about the economy and lending.

Bank shares are slipping in early afternoon trading last Friday, with the KBW bank index falling as much as 2.7%, extending losses into a fourth day, to the lowest level since November 2017. Results from JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co were mixed last Friday morning.

Outlook is a main question, given a tough start to the 4Q for US equities, Bloomberg Intelligence analyst Alison Williams said. Though her views heading into this week’s earnings, and for the 4Q, are little changed based on results so far, she flags JPMorgan’s outperformance in equity capital markets and equities trading, which bodes well for Goldman Sachs and Morgan Stanley.

JPMorgan, Wells Fargo and PNC Financial Services Group Inc management teams continued to tout a strong economy with the release of their 3Q results, but loan growth is “challenging”, amid tougher competition, elevated pay-downs and falling loan utilisation, SunTrust’s Jennifer Demba wrote in a note. Demba added that net interest margin (NIM) expansion is slowing as deposit costs continue to increase, while the US Federal Reserve’s 3Q rate hike had minimal impact on the quarter, and mortgage banking revenues continued to weaken.

“Management comments will be key,” KBW equity strategist Fred Cannon told Bloomberg via email ahead of last Friday’s earnings. “Credit metrics all remain excellent and credit spreads were narrow” throughout the quarter.

The 3Q “is an example of ancient history”, as reports won’t reflect the impact of higher rates on banks’ businesses, veteran bank analyst Richard Bove told Bloomberg. Bove will be looking at metrics including accumulated other comprehensive income and NIMs. He’s sceptical NIMs are getting a boost from higher rates, as banks’ actual operating environment is different from a “theoretician’s view”.

Even though investors may hunger for comments about recent moves, bank leaders may not have had enough time to extrapolate yet, Mark Howard, senior multi-asset strategist at BNP Paribas SA, said in an interview.

“A hiccup in the market is probably not going to change the outlooks,” Howard said, adding that JPMorgan CEO Jamie Dimon has “seen these hiccups dozens of times. A couple of days of volatility” probably doesn’t change much.

Howard added that “letting air out of the balloon” may turn out to be good for banks, as a reset can generate activity. “A sharp 3% correction can be a wake-up call to action”, bringing business forward as companies move more quickly with deals and in capital markets. Volatility may be lucrative for markets-oriented businesses as well.

Bank shares could use a little help these days. They peaked back in February — lifted by tax cuts, forecasts for faster economic growth, and deregulation — and have under performed the broader market since May as those factors faded.

Analysts in recent weeks had hoped that banks gloomy mid-September trading updates and lighter lending expectations had set the bar low enough for a post-earnings rally.

Sanford C Bernstein analyst John McDonald joined others looking for bank gains with earnings after recent underperformance. “We’re expecting solid results,” he wrote. That followed KBW saying stock prices are even lower than what tempered expectations for quarterly profits would imply, which may mean that the group is poised to rally. Earlier, Goldman said big-bank stocks were at an attractive entry point after underperforming, and as four of seven covered banks were due to beat estimates.

Investors may also have been relieved that the Democrats’ chances of capturing the Senate seem to have waned amid the controversy surrounding Supreme Court Judge Brett Kavanaugh. A potential “blue wave” had spurred concerns about taxes and tighter regulation.