The stock market continued its ascent on Wednesday, with the S&P 500 climbing higher (SNPINDEX:^GSPC) and the Dow Jones Industrial Average (DJINDICES:^DJI) setting yet another record.

Index

Point Change

Percentage Change

S&P 500

4.60

0.18%

Dow Jones Industrial Average

42.21

0.18%

Data source: Yahoo! Finance.

As for individual stocks, shares of Wal-Mart rose thanks to the retailer's massive new buyback plan. Meanwhile, investors readied themselves for upcoming bank earnings.

A sign for Wall Street, with the New York Stock Exchange in the background.

Image source: Getty Images.

Buybacks boost Wal-Mart

Wal-Mart Stores (NYSE:WMT) investors continued yesterday's rally, and shares gained 1.9%. That was enough to rank it 12th in terms of today's performance among stocks on the S&P 500, which tracks 500 of the biggest and best-known companies in the United States.

The nation's largest retailer has seen its stock lag the broader market over the past five years. It's up 14% since this time in 2012. That's a fraction of the 78% increase of the S&P 500.

WMT Chart

WMT data by YCharts.

E-commerce has been the principal source of Wal-Mart's troubles. Amazon.com in particular has proven to be an especially robust competitor. At the same time that the online retailer has seen sales climb through the roof, Wal-Mart has turned in same-store sales gains barely greater than 1%.

Wal-Mart's stock was given a shot in the arm this week, however, after the company announced a new $20 billion stock buyback plan, which it plans to utilize over the next two years. When a company repurchases stock, the number of its shares outstanding declines, concentrating ownership around fewer shareholders and thereby making each unit of stock worth more.

In Wal-Mart's case, its $20 billion buyback is massive, accounting for nearly 8% of the company's market capitalization. It should also translate into increased demand for Wal-Mart stock, as the company itself will be an active purchaser over the next 24 months.

Earnings season begins anew for big banks

A second undercurrent coursing beneath the surface of the market today is the onset of third-quarter earnings season, and banks are among of the biggest groups that will report this week. JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C), respectively the nation's first- and fourth-biggest banks by assets, are scheduled to release earnings on Thursday. Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) will publish their results the following day.

Generally speaking, analysts expect it to be a down quarter for banks. Three of the above banks in particular, all of which are universal banks with both investment and commercial banking operations, have already signaled that their Wall Street trading results will come in lower for the quarter.

At the beginning of September, Citigroup Chief Financial Officer John Gerspach said trading revenue at the bank would be down by 15% for the quarter compared to the year-ago period. Bank of America offered the same forecast, while JPMorgan Chase expects a 20% decline. Wells Fargo should be largely spared of any impact, given the comparatively meager size of its trading operations.

Beyond trading results, moreover, loan growth is expected to lag this quarter and stubbornly low interest rates will continue to compress lending margins, weighing on the results of even traditional commercial banks that do most of their business on Main Street as opposed to Wall Street.

In sum, until either tax reform or regulatory relief makes its way through Congress, or interest rates unexpectedly climb, it seems fair to say that bank profits, while considerable, will grow at a slower pace than these companies would like.

John Maxfield owns shares of Bank of America and Wells Fargo.The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.