Guggenheim said investors shouldn't worry too much about stagnation on the top line.

"Don't get lost on the headwinds for revenue growth," the firm said. "As the Large Cap Banks are still in earnings recovery mode, efficiency improvements are just as important. After improving 1.7 percentage points in 2Q12, we forecast a 1.6 percentage point gain in 3Q12's efficiency ratio, which is responsible for ~100% of this quarter's expected sequential increase in operating EPS."

Favorite picks for Guggenheim include Regions Financial ( RF), PNC ( PNC), and Citigroup ( C).

"We are expecting operating earnings momentum improvements to drive RF's and PNC's stock prices higher, while we think C has a strong return-to-risk ratio and could display further progress in minimizing future exposure to Citi Holdings," the firm said, adding that it's looking for "favorable 3Q12E operating earnings surprises with double-digit annual growth" from Citigroup, JPMorgan, U.S. Bancorp ( USB), First Horizon National ( FHN), Regions, and SunTrust Banks ( STI).

"We believe these seven Large Cap Banks are positioned to benefit the most by reporting better than expected earnings this quarter while continuing to generate strong earnings momentum," the firm said. Most of the banks with our unfavorable earnings expectations relative to market expectations are related to unusual items, and include Bank of America ( BAC), BB&T ( BBT), PNC and State Street ( STT). The inclusion of these large unusual items is inconsistent across the market estimates, making the consensus less useful for these banks."

The economic calendar includes the producer price index for September at 8:30 a.m. ET; the preliminary University of Michigan consumer sentiment survey for October at 9:55 a.m. ET; and the Treasury Department's budget for September at 2 p.m. ET.

And finally, Thursday's big warning du jour came courtesy Advanced Micro Devices ( AMD), which underscored the weakness in the PC market by forecasting a 10% sequential decline in revenue growth for its third quarter.

The stock was last quoted at $2.90, down 9.4%, on volume of 1.9 million, according to Nasdaq.com.

-- Written by Michael Baron in New York.

>To contact the writer of this article, click here: Michael Baron.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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