Wall Street's Big Five Banks Expected to Post ~$39B in Q2 Trading Revenue
Claire Weston
JPMorgan, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley are expected to report combined Q2 trading revenue near $39 billion, driven by heightened volatility and surging client activity; equities trading neared records, dealmaking rebounded, but persistent high rates and private-credit strains loom.
Where is the $39 billion coming from?
The five banks' combined Q2 trading revenue is expected to approach $39 billion, fueled by months of elevated market volatility and rising client hedging demand.
This means → volatility is the raw material of a trading desk — the choppier the market, the more clients need to hedge and rebalance, and the more fees and spreads the banks collect.
All five will report Q2 results on Tuesday, kicking off this earnings season.
Why is equities trading the standout this quarter?
Several banks' equities-trading revenue is expected to approach all-time highs, just below the Q1 peak. Goldman Sachs' equities unit is on track to set a new record, with revenue forecast above $5 billion.
KBW analyst Chris McGratty noted that banks with Asian equity exposure — Morgan Stanley in particular — stand to gain extra from volatility in that region.
In plain terms = Asian stock markets have been unusually choppy, handing those banks more business than usual.
How hot is the dealmaking pipeline?
Goldman Sachs has advised on more than $1 trillion in M&A deals year-to-date — the fastest any bank has hit that milestone.
In June, Goldman joined Morgan Stanley and BofA to complete SpaceX's IPO, the largest ever. The same month it helped Alphabet raise over $80 billion in equity to fund AI spending and chip-supply expansion.
Morgan Stanley analyst Manan Gosalia expects management commentary on the deal pipeline to remain upbeat, setting the stage for continued strength through H2 and into 2027.
Are there cracks in the IPO pipeline?
Recent tech-stock volatility has raised doubts about whether other marquee IPOs can proceed on schedule — OpenAI is reportedly considering pushing its IPO to next year.
After the news broke, Goldman Sachs and Morgan Stanley shares both dipped.
This means → the deal pipeline may look full on paper, but execution still depends on market windows. If tech volatility persists, queued mega-IPOs could slip one after another.
Is "higher for longer" good or bad news for banks?
Markets are betting the Fed under new chair Kevin Warsh will keep rates elevated for an extended period. Higher rates boost banks' loan-interest income but also strain consumer repayment capacity, potentially forcing higher loan-loss provisions.
McGratty said: "When 'higher for longer' becomes the base case, you have to think more about margin peaking."
In plain terms = high rates let banks earn more interest in the short run, but drag them out long enough and borrowers start defaulting — forcing banks to set aside more cash as a cushion.
What is happening in private credit?
The market turmoil from earlier this year has largely subsided, but some funds still face redemption pressure.
JPMorgan analysts noted that non-bank financial lending growth slowed quarter-on-quarter; the market is waiting for earnings disclosures to gauge whether this marks a real deceleration in private-credit exposure growth.
This reflects a deeper question: private credit — the lending market outside the traditional banking system — expanded rapidly over recent years, and investors now want to know whether that expansion is starting to cool.
Content is for reference only, not financial advice.