Investors have looked forward to earnings season for quite a while now, hoping to get actual evidence about how macroeconomic conditions are affecting companies in specific industries. This week saw the official beginning of third-quarter earnings season, and among the earliest reports were those from several major U.S. banks.

In particular, Friday brought the latest reports from JPMorgan Chase (JPM -1.10%) and Wells Fargo (WFC -1.43%), and both of those bank stocks showed solid gains even on a down day on Wall Street. The news each bank gave wasn't unequivocally positive, but investors took their results with a measure of hope that the financial industry won't face systemic threats that could create a slew of unexpected problems in the months and years ahead.

JPMorgan bounces back

Shares of JPMorgan rose nearly 3% by midday on Friday, making back some of their losses over the past several months. The Wall Street giant's third-quarter results were better than most investors had expected to see, although comments from CEO Jamie Dimon continued to force investors to consider the potential future impacts of deteriorating economic conditions.

JPMorgan's baseline metrics were mixed. Revenue moved higher by 10% year over year to $32.7 billion. Net income moved 17% lower to $9.74 billion, but the resulting $3.12 per share in earnings was better than most investors had anticipated.

Beneath the headlines, though, there was a lot happening with JPMorgan. The bank built its credit reserves by more than $800 million, partially reversing a year-ago release of $2.1 billion and showing how rising nervousness about the creditworthiness of bank customers in times of increasing economic stress is affecting JPMorgan's finances. Net investment securities losses also weighed on results, costing JPMorgan almost $960 million.

That said, JPMorgan is making steady progress toward shoring up its capital reserves while still making investments to grow its business and serve customers, and investors were pleased to hear that the bank expects to resume its temporarily suspended stock buybacks early in 2023. Dimon expressed his warnings about what the future could bring firmly in the context of continued healthy spending from consumers that are keeping businesses in solid financial condition. That could change, but JPMorgan stands ready to keep delivering what its customers need.

Wells Fargo stays on the comeback trail

Shares of Wells Fargo were up even more sharply, rising nearly 4% at midday Friday. Investors were pleased to see that the bank continues to make progress from the reputational damage it suffered several years ago, although Wells Fargo did continue to have to deal with the consequences.

Like JPMorgan, Wells Fargo saw mixed results. Revenue was up about 3.6% to $19.5 billion, lifted largely by a big jump in interest income. However, net income took a more than 30% hit to $3.53 billion, with CEO Charlie Scharf calling out a $2 billion impact related to litigation, customer remediation, and regulatory matters.

You can also see the measures that Wells Fargo is taking to strengthen its balance sheet. Charge-offs were up 55% year over year to nearly $400 million, and the bank boosted its allowance for credit losses by $385 million during the quarter. Asset and deposit levels were actually down from year-ago levels, but loan balances have risen sizably.

Investors have long seen Wells Fargo as a value play in the banking industry, figuring that its controversies wouldn't last forever. Unfortunately, it's taken a whole lot longer for the bank to get out from under all the troubles it brought on itself. With shares still well below where they were as long as ago as 2014, Wells Fargo still has work to do before it can reassure the broader investing community that it can keep up with its peers.

More broadly, the fact that bank stocks are moving higher even as the market struggles shows some signs about what investors are looking for. With attractive valuations but considerable uncertainty, bank stocks could be solid value plays with considerable exposure to an eventual recovery, and that could make the sector one that helps lead Wall Street out of the bear market.