You’d think all of the chaos in the stock market would be hurting Wall Street wallets—but in fact, the investing patterns of rabid, anxious day traders are actually boosting banks' profits.
Big banks kicked off earnings season with a bang, as Wall Street’s top dogs largely smashed expectations and brought in record profits.
- JPMorgan Chase beat Q1 earnings and revenue estimates due to high investment banking fees and a surge in equity trading volume—aka, thanks to all of r/WallStreetBets rapidly buying and selling stocks. However, CEO Jamie Dimon warned that the current quarter could not be quite as rosy, given “considerable turbulence” for the US economy.
- Morgan Stanley also beat earning and revenue expectations due to a 45% surge in equities trading over the quarter, along with securing a deal for Twitter’s LBO debt.
- Wells Fargo topped earnings estimates, but missed on revenue. The bank also warned that it could be hit by the tariff volatility, and executives pushed for a resolution to trade war turmoil.
- BlackRock’s assets under management hit a new record: a staggering $11.6 trillion. But despite beating Q1 earnings estimates, it missed revenue projections, citing client anxiety thanks to tariffs.
- Goldman Sachs also saw its trading revenue jump 27% as investors tried to take advantage of market volatility. But its investment banking fees dropped 8%, given that dealmaking is at a standstill due to economic uncertainty.
- Bank of America also surprised on the upside—its profits climbed 11% and revenue handily beat expectations after net interest income rose thanks to lower costs and higher deposit totals than last year.
The other shoe is dropping
Despite a largely successful quarter driven by a jump in equities trading, executives are still on edge.
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After all, these results don’t include the tariff-driven mania of the past two weeks, which has changed the entire game for pretty much every one of these bank’s clients.
Many of the themes bankers were expecting to take hold this year, like a surge in US stocks due to deregulation and a revival of the IPO market, aren’t just not coming to fruition—they’ve been replaced with dire warnings of a serious economic slowdown.
“The prospect of a recession has increased with growing indications that economic activity is slowing down around the world,” said Goldman Sachs CEO David Solomon on a call with analysts on Monday.
Then again, many banks managed to pull off a surprise beat this quarter, so you can’t rule out an upset yet.—LB