JPMorgan, Goldman Earnings: 2 Banks Push Back on Trading Fears

JPMorgan Chase and Goldman Sachs posted another strong quarter, with results boosted by their equities trading businesses, according to the Financial Times. The results land at a moment when some investors had started to question whether a trading boom that has carried Wall Street's largest banks through recent quarters was beginning to fade.

The FT frames the two banks' results as an effort by Wall Street to play down those investor worries, with strength in equities trading cited as the clearest evidence that the run in trading-driven revenue has further to go. For JPMorgan and Goldman, two institutions whose fortunes are closely watched as a proxy for the health of global markets, another quarter leaning on equities desks offers a counterpoint to the idea that the trading cycle has peaked.

What lifted JPMorgan and Goldman's results?

Equities trading operations were the common thread in both banks' results this quarter, according to the Financial Times. Trading and markets businesses have been a dependable source of revenue for the largest Wall Street firms through recent periods of market activity, and the latest results continue that pattern rather than breaking from it.

Why were investors worried about a slowdown?

The Financial Times' framing of the earnings reports as an attempt to ease investor fears points to a broader question hanging over bank stocks: whether revenue tied to trading activity, which can swing with market volatility, is sustainable once that activity normalizes. That question has shadowed Wall Street results for several quarters, even as banks have repeatedly beaten expectations tied to trading desks.

How are the banks responding to the concerns?

Rather than address the worry directly in commentary, JPMorgan and Goldman let the numbers argue the case, the Financial Times reports, with another quarter of equities strength serving as the rebuttal. That approach, letting results speak rather than offering guidance on the durability of the trend, has become familiar to those tracking Wall Street's trading-revenue debate.

What should investors watch next?

The broader test for Wall Street's trading boom will come as more of the largest lenders report quarterly results in the days ahead, with each additional report either reinforcing or complicating the picture JPMorgan and Goldman have drawn. Investors weighing the question have a short list of signals to track.

• Whether other major banks reporting this earnings season also show equities trading as a primary driver of results.
• Whether market volatility, a key input for trading revenue, holds up or recedes in the current quarter.
• Whether bank executives offer forward guidance on trading revenue durability in upcoming earnings calls.
• Whether analysts revise expectations for Wall Street's trading-dependent revenue mix heading into next year.

For now, the Financial Times' reporting suggests JPMorgan and Goldman Sachs are content to let a strong equities quarter do the talking on whether the trading boom still has room to run.