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Two out of three of the big banks reporting first quarter earnings this morning beat Wall Street estimates. Citigroup (C) reported earnings of $1.35 a share, 11 cents a share above the Wall Street consensus. JPMorgan Chase (JPM) reported earnings of $1.65 a share, 12 cents a share above the Wall Street projection. Wells Fargo (WFC) didn’t do nearly as well, beating on earnings but disappointing on revenue, but then, the disappointing results at Wells Fargo were pretty much expected, given the continued turmoil at the bank unleashed by the scandal surrounding incentive goals that encouraged bank employees to open accounts for customers without those customers asking to open those accounts.

The question the positive reports from Citigroup and JPMorgan Chase raises for the stock market as a whole is “Why isn’t the market up more strongly on such good earnings reports?” At 11:45 a.m. New York time JPMorgan Chase was up 0.43% and Citigroup waas ahead 1.12%. The Standard & Poor’s 500 stock index had advanced only 0.10%. The NASDAQ, with its heavy weighting toward financials was up only 0.24%.

First, the earnings.

Both Citigroup and JPMorgan Chase finally saw some revenue growth–revenue growth has lagged behind the earnings recovery at the big banks. Revenue at Citigroup climbed 3.2% year over year to $18.12 billion, well above the $17.75 Wall Street consensus. At JPMorgan Chase managed revenue climbed 6.2% year over year. Reported revenue was $24.7 billion , ahead of the $24.4 billion Wall Street projection.

At Citigroup the bank’s loan book grew by 2% year over year in the quarter to $629 billion. Investment banking revenue climbed by 39%. Advisor revenue increased by 8%. Fixed Income revenue grew by 19% and Equity Markets revenue grew by 10%.

The picture was roughly similar at JPMorgan Chase. Average core loans were up 9% year over year. Consumer and Business Banking revenue climbed 8% on strong growth in deposits. Investment banking revenue climbed 37%. Net interest income increased by 6% year over year.

The bank continued to show high costs in its credit card business for new account origination. JPMorgan Chase also saw a drop in Mortgage Banking revenue of 18% due to lower revenue from servicing mortgages as the bank ran off some of its servicing portfolio.

The negatives in JPMorgan Chase mortgage business showed up as a major problem in Wells Fargo’s big mortgage business. At $1.00 a share the bank beat Wall Street earnings estimates by 4 cents a share but revenue fell 0.9% year over year to $22 billion against the $22.25 billion Wall Street consensus. Total average loans fell $502 million in the quarter to $963.6 billion. Mortgage originations plunged to $44 billion from $72 billion in the fourth quarter of 2016. Higher expenses as the company seeks to recover from its unauthorized account scandal drove the bank’s efficiency ratio to 62.7% against 61.2% last quarter. (In this ratio a higher number isn’t a good thing. It’s calculated by dividing a bank’s Non-interest expenses by it’s net income. It essentially measures how much it costs a bank to generate a dollar of income.) Guidance didn’t exactly set a lot of hearts singing. Mortgage production would continue to decline in the second quarter, management projected. Continued elevated expenses would pressure the bank’s efficiency ratio.


Second, why didn’t the Citigroup and JPMorgan Chase results do more to move the market?

The simple reason is that the good news was already baked into the price of bank stocks. Last year.

Shares of JPMorgan Chase, for example, were up 40.97% for the last 12 months.

The slightly more complex reason is that after those big gains investors have recently started to wonder if banks really were going to reap all those expected rewards as quickly as anticipated. JPMorgan Chase shares are actually down by 1.7% for 2017 to date. Despite two interest rate increases from the Federal Reserve, for example, long-term interest rates have refused to move up as strongly as markets had been expecting. And since banks make their money on the difference between short-term interest rates (which they pay to borrow their capital) and long-term interest rates (which they collect as interest on loans and mortgages), the stickiness of long term interest rates suggests that net interest margins at banks might well lag market hopes. At the same time, even slightly higher long-term interest rates look like they have the power to slow the mortgage market. Which raises worries about the effect of those interest rates on the housing sector and the economy as a whole.

Three earnings reports don’t a market make. And the fact that the market is closed for Good Friday tomorrow means investors and traders are in a cautious mood today. We’ll get more earnings on Monday–and more market reaction.