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By Sukriti Gupta and Noel Randewich (Reuters) -Wall Street indexes were mixed on Tuesday as investors digested mostly positive quarterly results from big U.S. banks, comments from Federal Reserve Chair Jerome Powell and an ongoing U.S.-China trade war. A slew of major lenders reported solid results on strong performance in the investment banking segment, helping the S&P 500 banking index rally 2%. Wells Fargo surged 8.4% and was on track for its best day in six months and Citigroup jumped 4.6% after both lenders beat estimates for third-quarter profit. JPMorgan Chase raised its full-year forecast for net interest income and Goldman Sachs beat Wall Street expectations for quarterly profit. However, shares of both JPMorgan and Goldman Sachs, which have outperformed most rivals this year, fell 1.3% and 0.6%, respectively.  BlackRock's assets under management hit a record $13.46 trillion, lifting its shares 3.7%. U.S. President Donald Trump's trade war with China remained in focus for investors as the two countries began charging additional port fees on ocean shipping firms that move everything from holiday toys to crude oil. Global equities were shaken on Friday after Trump threatened 100% tariffs on Chinese goods after Beijing imposed controls on the export of rare earth minerals, although he softened his tone over the weekend. "The market is really struggling with where this shakes out," said Ross Mayfield, an investment strategist at Baird Private Wealth Management. "If the (Trump) administration feels like ramping up these tensions again, the market looks pretty expensive right now for that sort of fight, especially if 100% tariffs and other measures are back on the board." The U.S. labor market remained mired in its low-hiring, low-firing doldrums through September, though the economy overall "may be on a somewhat firmer trajectory than expected," Powell said in remarks prepared for delivery at a National Association for Business Economics conference. The S&P 500 was up 0.29% at 6,674.27 points. The Nasdaq declined 0.21% to 22,646.84 points, while the Dow Jones Industrial Average was up 0.91% at 46,488.75 points. Ten of the 11 S&P 500 sector indexes rose, led by financials, up 1.7%, followed by a 1.53% gain in industrials. Gains in industrial stocks supported the Dow. Caterpillar  jumped almost 5% after J.P. Morgan raised its price target on the stock. The International Monetary Fund marginally lifted its 2025 global growth forecast, as tariff shocks and financial conditions have proven more benign than expected, while warning that a renewed U.S.-China trade war could slow output significantly. Advancing issues outnumbered falling ones within the S&P 500 by a 5.4-to-one ratio. The S&P 500 posted 22 new highs and 10 new lows; the Nasdaq recorded 100 new highs and 91 new lows. (Reporting by Sukriti Gupta and Twesha Dikshit in Bengaluru, and by Noel Randewich in San Francisco; Additional reporting by Sinead Carew; Editing by Maju Samuel and Matthew Lewis)

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By Tatiana Bautzer, Nupur Anand and Manya Saini NEW YORK (Reuters) -Top U.S. bankers predicted business would continue to boom as equity markets surged over the last quarter and the economy and consumer spending held up despite sweeping tariffs, but some warned asset prices may be unsustainably high.  Goldman Sachs', investment banking revenue jumped 42% in the third quarter, while rival JPMorgan Chase's investment banking fees climbed 16%, the banks reported on Tuesday. Wells Fargo and Citigroup also put in solid IB performances.  Consumer finances remain healthy, with JPMorgan noting consumer delinquencies were trending below expectations, although executives said they were monitoring for any deterioration as labor market data weaken. "The macro environment reflects the global economy that's proved more resilient than many anticipated. The U.S. continues to be a pacesetter, driven by consistent consumer spending, as well as tech investments," Citigroup CEO Jane Fraser said during a conference call. "That said, there are pockets of valuation frothiness in the market." RECORD-HIGH MARKETS STIMULATE DEALS Wells Fargo Chief Financial Officer Mike Santomassimo told journalists the deals pipeline looked good. His counterpart at JPMorgan, Jeremy Barnum, said the bank enjoyed its busiest summer in M&A for a long time and that equity capital markets and initial public offering conditions were also strong heading into the fourth quarter.  Deals have been buoyed by higher asset prices, with U.S. equity markets repeatedly hitting records this year, driven by excitement over U.S. Federal Reserve interest rate cuts. However, that exuberance is causing concern that a major asset price correction is on the horizon. The International Monetary Fund on Tuesday also warned that markets were too complacent about trade and geopolitical risks. "A lot of assets (are) looking like they are entering bubble territory. But those prices fuel IB, equities, asset management," said JPMorgan JPM.N CEO Jamie Dimon. He said in credit markets, there were "early signs of some excess."  Wells Fargo surged 8% in afternoon trading, while Citigroup climbed 5%. Goldman Sachs and JPMorgan fell slightly. "Momentum continues across the majority of business lines with Wall Street remaining strong and the demand for consumer loans is very resilient," said Mac Sykes, a portfolio manager at Gabelli Funds. HIGHER INVESTMENT BANKING FEES Global investment banking fees reached a four-year high in the first nine months of the year, underpinning earnings.    “The thing about choppy waters is that they create opportunities, and the market volatility experienced over the past few months has created the perfect environment for U.S. investment banks to thrive,” said Danni Hewson, head of financial analysis at investment platform AJ Bell. Worldwide investment banking fees rose 9% to $99.4 billion so far this year, the highest since records were set in 2021, according to LSEG data.  M&A dealmakers were standout performers in the third quarter, particularly in technology and financial M&A, where fees increased 55% and 34%, respectively, the data showed.   In addition to buoyant equity markets and interest cuts, dealmaking has been spurred by lighter regulations under U.S. President Donald Trump, which offset the uncertainty from trade tensions that stalled activity earlier this year.  Executives said they expected more regulatory wins, as Trump's bank regulators overhaul capital rules. Global mergers and acquisitions surged 40% in the third quarter versus the previous year, according to Dealogic data. Megadeals also resumed, hitting a stunning $1.26 trillion.  The $55 billion acquisition last month of video game developer Electronic Arts by buyout group Silver Lake, Saudi Arabia's Public Investment Fund and Affinity Partners was the largest leveraged buyout in history.  The rebound in activity also led to a flurry of job-hopping by senior executives.  Even the U.S. government is contributing to the boom, with the Trump administration pursuing deals across up to 30 industries, involving dozens of companies deemed critical to national or economic security, Reuters reported this month.  "There is no question that there's a fair amount of investor exuberance," Goldman Sachs CEO David Solomon told analysts. "While I feel good about the forward outlook on balance, the market operates in cycles. Disciplined risk management is imperative." Global investment banking fees: Bank 2025 YTD 2024 YTD 2024 Wallet Rank share (%) JPMorgan 7.7 1 7.8 Goldman Sachs 6.3 2 6.1 Morgan Stanley 5.2 4 4.8 BofA 5 3 5.5 Citi 4.2 5 3.9 Barclays 2.7 6 2.9 Wells Fargo 2.5 7 2.3 Source: LSEG ​ (Reporting by Tatiana Bautzer, Nupur Anand, Manya Saini, Tatiana Bautzer, additional reporting by Pritam Biswas, Saeed Azhar, Arasu Kannagi Basil, Laura Matthews; Editing by Lananh Nguyen, Megan Davies, Michelle Price, Nick Zieminski, Rod Nickel)

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By Howard Schneider PHILADELPHIA (Reuters) -The U.S. labor market remained mired in its low-hiring, low-firing doldrums through September, though the economy "may be on a somewhat firmer trajectory than expected," Federal Reserve Chair Jerome Powell said on Tuesday, noting that policymakers will take a "meeting-by-meeting" approach to interest rate cuts as they balance job market weakness with above-target inflation. Powell, in remarks to a National Association for Business Economics conference in Philadelphia, acknowledged the economic dilemma that has split U.S. central bank officials almost evenly among those concerned most about still-high and potentially rising inflation, and those worried the labor market may be facing a fast slide downward. A newly added complication, Powell said, is that recent data on economic activity have been stronger than expected, but that hasn't yet translated into renewed hiring strength. "You do have a bit of tension between labor market data – we see very low levels of job creation – and yet people are spending," Powell said. "We are going to have to see how that plays out." The analysis, for now, will be done in the absence of official data largely suspended by the U.S. government shutdown. Powell said he felt there was adequate insight for the Fed's coming October 28-29 meeting, but that "we'll start to miss that data, particularly October data," if the shutdown persists. But for the time being, Powell said, there is a broad-enough array of public and private information to make a policy judgment, with the Bureau of Labor Statistics recently told by the Trump administration that it could release its Consumer Price Index report for September. It is now due to be published on October 24, ahead of the Fed's next policy meeting. "Based on the data that we do have, it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago," at which the Fed cut its benchmark interest rate by a quarter of a percentage point, Powell said. "Data available prior to the shutdown, however, show that growth in economic activity may be on a somewhat firmer trajectory than expected." His remarks did not change the near unanimous consensus among investors that the Fed would cut its policy rate by another quarter of a percentage point in two weeks. Powell is "saying that the economy is on solid footing, but he's also saying we have weakness … He's preparing the markets for a series of rate cuts, but not necessarily in a sequential order," said Peter Cardillo, chief market economist with Spartan Capital Securities in New York. "He'll cut by 25 basis points at the end of this month, then they'll assess." 'NO RISK-FREE' POLICY PATH Powell noted the "healthy debate" within the Fed, reflected in recent projections that showed about half of its policymakers expecting only one or no more rate cuts this year, and the rest projecting two or more. It's a sign of the tradeoffs the Fed is facing between securing its 2% inflation target and protecting the job market. "There is no risk-free path for policy as we navigate the tension between our employment and inflation goals," Powell said, noting that the policy projections issued by Fed officials every three months "should be understood as representing a range of potential outcomes whose probabilities evolve as new information informs our meeting-by-meeting approach to policymaking." Even with the September jobs report delayed, Powell, who devoted most of his formal remarks on Tuesday to a discussion of Fed balance-sheet policy, said he drew from a variety of public and private data sources for insight on the job market. "While official employment data for September are delayed, available evidence suggests that both layoffs and hiring remain low, and that both households' perceptions of job availability and firms' perceptions of hiring difficulty continue their downward trajectories," Powell said. The elevated inflation, he said, was partly due to rising goods prices that "primarily reflect tariffs rather than broader inflationary pressures." (Reporting by Howard Schneider; Editing by Paul Simao)

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WASHINGTON (Reuters) -A shutdown of the U.S. government could hinder the accessibility of insurance coverage to prospective homeowners in flood-prone areas, and cost the already struggling housing market billions of dollars in delayed contract closings, data showed on Tuesday. The report from HomeAbroad, a real estate investment technology platform, estimated that about 3,619 home closings were at risk nationwide daily, translating to roughly a loss of $1.59 billion based on the current $439,278 median home price. The National Flood Insurance Program, which helps to provide coverage for properties in high-risk areas, has suspended services during the shutdown, now entering its third week. Numerous government services have been impacted by the shutdown, which was triggered by a lapse in funding amid a political standoff between Republicans and Democrats in Washington. "This represents the largest potential disruption to the U.S. housing market from a single policy intervention in recent history," said Michele Lawrie, real estate consultant at HomeAbroad. "The economic scale of this shutdown extends far beyond individual homebuyers." The housing market has been battered by higher mortgage rates as the Federal Reserve hiked interest rates to curb inflation. Though mortgage rates have declined as the U.S. central bank resumed lowering borrowing costs last month, an uncertain economic outlook marked by a lethargic labor market has sidelined many prospective homeowners. HomeAbroad projected that a two-week-long shutdown would put 50,658 home closings at risk, with an estimated economic loss of $22.27 billion. A one-month-long shutdown was seen threatening 108,570 home closings, costing an estimated $47.68 billion. The longest government shutdown was in 2018-2019 and lasted 35 days. "A shutdown of similar length today could potentially delay over 126,000 home closings, threatening more than $55 billion in housing market transactions, illustrating the high stakes involved," said Lawrie. HomeAbroad estimated eight states including Maryland, Virginia, North Carolina and Florida, could see more than half of their home sales disrupted as they were highly vulnerable because of elevated flood insurance penetration rates.  (Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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