Econified

The largest bank in the United States, JPMorgan Chase (JPM), lost 4.67% of its value today. This decrease means that the company lost close to $40B in value today alone. This is comparable to the size of the entire Kroger company. Single stocks tend to be risky investments since an investor is more exposed to fluctuations in price due to assets being solely dependent on one organization’s performance. However, Chase has been a solid investment for many years, and it is the largest bank in the United States by a large margin. The Federal Reserve reported, as of 30 September, Chase bank has over $3.8 trillion in total assets. The next highest, Bank of America, has about $2.65 trillion in total assets, about a 30% decrease from Chase.

Daily fluctuations are normal in the stock market, but a drastic drop like this is pretty rare. This is especially true with a large and dominant company like Chase. This is especially interesting because the entire financial services industry did not feel nearly as big as an impact. The Dow Jones U.S. Financial Services Index (DJUSFV) only went down 0.44% today with some large banks actually increasing in value. Additionally, Chase’s earnings call is not until next month, so it is weird to see a single stock take such a big decrease while the entire industry did not feel that impact. There was nothing concerning their Q3 earnings, so the company seems to have fallen for no reason.

What happened?

Most of this impact is because of statements by a Chase executive, Marianne Lake, who suggested that the bank will have more expenses next year. She reportedly said that the bank will need to spend $105 Billion next year. According to Bloomberg’s closing bell podcast, Lake attributed the increases to, “volume and growth-related expenses.”

This does not really tell a very comprehensive story other than that expenses will grow next year. Growth in expenses could be worthwhile if this growth also yields revenue growth. Increased expenses will still bring more risk to the company. Here is a summary of the last four quarters’ expenses from Chase’s earnings reports:

• Q3 2025: expenses of $24.3B
• Q2 2025: expenses of $23.8B
• Q1 2025: expenses of $23.6B
• Q4 2024: expenses of $22.8B

This shows that the average growth in expenses has been around $500M per quarter for the last year. 2026 expenses totaling $105B would mean that expenses would have to grow around $2.5B a quarter. Essentially, this means that Chase is estimating to see their expense growth speed up by a factor of five next year.

What does this mean?

Growing expenses are not optimal for a company because their margins will be cut. Chase is still a very profitable company with a 2% dividend and a strong P/E ratio of 14.88. This company is also nearing $1 Trillion in market capitalization with growth of over 25.21% YTD. This announcement is certainly a concern as tightening margins is not a good thing for a business, but the company is still performing very well. Chase is the largest domestic bank, so failure is highly unlikely. There will likely be clearer indicators of worsening conditions if the bank was actually headed for tough times. This is certainly something for investors to be wary about, but it will not be the end of Chase.