U.S. shares moved lower on Tuesday as market participants monitored geopolitical developments in the Middle East and positioned portfolios ahead of the first-quarter 2026 earnings season, which opens on Wednesday with Delta Air Lines reporting results.
Goldman Sachs highlighted the strain on global oil availability after the Strait of Hormuz was described as largely closed to oil tankers. That disruption has materially reduced flows and contributed to a sharp rise in West Texas Intermediate crude prices. The bank said the tighter supply backdrop has pushed investors to reassess potential effects on inflation and the trajectory of U.S. economic growth.
Against this backdrop, Goldman Sachs analyst Richard Ramsden expects there is scope for net income growth at banks in the first-quarter reporting period. Ramsden points to an environment in which markets have pared back expectations for Federal Reserve rate cuts and loan growth has remained robust, factors the firm believes could support revenue and net income for lenders.
Goldman Sachs named Bank of America, Citigroup, and Wells Fargo as recommended buys. The firm noted, however, that hedge funds have been de-risking portfolios, a development that may weigh on capital markets business for a subset of banks later in the year. That potential reduction in capital markets activity represents a countervailing risk to the revenue upside the firm anticipates from lending and interest-rate developments.
The combination of constrained oil shipments through a key waterway and elevated oil prices has created a backdrop in which inflation and growth implications are front of mind for investors. At the same time, banking sector dynamics -- including favorable loan trends and evolving market-rate expectations -- are shaping analyst views ahead of initial quarterly reports.
What to watch
- Delta Air Lines will kick off the Q1 2026 earnings season with its results on Wednesday.
- Goldman Sachs is monitoring how higher oil prices and tightened supply could filter through to inflation and growth expectations.
- Selected banks may benefit from higher net interest income, while capital markets activity could face headwinds if hedge funds continue to de-risk.