Wall Street’s largest banks have reported robust quarterly performances, largely fueled by increased trading activity amid the recent market volatility attributed to President Donald Trump’s evolving trade policies. Goldman Sachs, Morgan Stanley, JPMorgan Chase and Bank of America all beat Wall Street analysts’ estimates for the first quarter. In comparison, just one bank Wells Fargo missed estimates.
Analysts have recently called this quarter’s results “spectacular,” “extraordinary,” and “awesome” on quarterly conference calls. The stocks performance of all of these banks is a strong sign that trading activities, most notably in equities markets, have come roaring back. As always, the first quarter sparks an explosion of trading activity. Hedge fund and pension fund investors start the new performance cycles, adding to the seasonality of the busyness in this time period.
Goldman Sachs CEO David Solomon noted the company’s strong business performance, stating, “the business is performing very well and clients are very active.” Speaking last week on an online briefing, Mr. Our intent is to reposition our policy and advocacy work to meet this new reality of dynamic trade policy, which is changing by the day.
In early April, President Trump announced sweeping tariffs, on the same day that he called for what he called “Liberation Day.” After a short implementation period, these tariffs were rolled back, causing significant market disruption across many asset classes. This ambiguity has forced institutional investors to prepare themselves accordingly for the change that will come with the Trump administration’s new regime. Solomon remarked, “We obviously saw significant moves in equity markets as people positioned for a different kind of trade policy during March.”
Morgan Stanley’s recent success can be attributed to CEO Ted Pick’s successful overhaul of the firm’s fixed income business, which has propelled its equities franchise to new heights. Under his leadership, Morgan Stanley’s trading desk has been able to provide faster execution and larger credit lines to professional investors, positioning the firm advantageously amid market fluctuations.
The six largest U.S. banks, including Citigroup and Wells Fargo, collectively reported $16.3 billion in stock trading during the quarter, marking a 33% increase from the same period last year. A new wave of trading activity is flooding in. In this angst-driven economic environment, investors professional and amateur alike are recognizing tremendous opportunities for profits. And as Morgan Stanley CEO Ted Pick said, they have “a ton to win and a ton to lose.”
Wall Street’s largest and most powerful trading desks have been deeply and importantly involved in underwriting this new and expanded action. Goldman Sachs, Morgan Stanley, and JPMorgan Chase support positive change by providing professional investors the tools they need. These tools allow them to be more nimble in the face of volatility. James Shanahan noted that “so long as the volatility continues — and there’s no reason to believe it’s going to stop anytime soon — equities trading desks should remain plenty busy.”
The troubles go well beyond trading, even as that line item has brought in some unexpected good news this year. Because uncertainty remains, corporate leaders are postponing strategic decisions. With the investment banking market stagnated, regional banks have found themselves with little upside. They are facing severe pressure from stagnant loan growth and an upsurge of borrowers defaulting on their loans.
Major banks are doing quite well in this new, increased trading activity environment. In doing so, they’ve reserved potential billions for bad or defaulted loans, increasing profits in the meantime. As their trading business continues to boom, the gulf between super financial institutions and regional banks could grow even more.