Geopolitical tensions and AI drive market volatility, Wall Street trading feast continues: Top five banks expected to rake in $39 billion in trading revenue in Q2.

The trading feast on Wall Street is expected to continue. Several of the largest banks in the United States will kick off the second quarter earnings season on Tuesday. Analysts predict that the trading revenues for JPMorgan Chase, Bank of America Corp, Citigroup, Goldman Sachs Group, and Morgan Stanley in the second quarter will be close to $39 billion. It is reported that JPMorgan Chase, Bank of America Corp, Citigroup, Wells Fargo & Company, and Goldman Sachs Group, among others, will be the first to release their earnings reports on Tuesday, with Morgan Stanley following on Wednesday. Since 2026, geopolitical tensions have continued to escalate, along with the uncertainty brought by artificial intelligence (AI), and market volatility remains high, providing continued support for trading operations. Stock traders at several major banks are expected to achieve near-record revenues, slightly below the record set in the first quarter. Stock traders at Goldman Sachs Group are expected to perform well again in the second quarter, with revenues expected to exceed $5 billion. Keefe, Bruyette & Woods analyst Chris McGratty stated that banks like Morgan Stanley, which are involved in Asian equity markets, may benefit from the market volatility during this period. Large bank stock traders are expected to deliver the second-best quarterly performance in history. JPMorgan analyst Vivek Juneja stated, "Since mid-May, with concerns about war receding, strong consumer growth, and significant market gains, bank stocks have performed well and outperformed the broader market." Key points in the earnings report may include "higher-than-expected investment banking and trading revenues, with strong prospects for continued strength." Meanwhile, investors are focusing on who may succeed Jamie Dimon as CEO of JPMorgan Chase. UBS Group AG analyst Erika Najarian stated on Monday, "Given market expectations and investor positions, Goldman Sachs Group faces the greatest challenge." He added that five of the six major U.S. banks will announce earnings on Tuesday, "standing out is not easy, especially considering that I expect JPMorgan Chase's earnings call to largely revolve around the issue of succession." Investment banking business expected to perform well The second quarter market has sent a clear signal: Wall Street investment banks are once again regaining their former glory. As of mid-June, Goldman Sachs Group's bankers had participated in merger deals totaling over $1 trillion this year, setting a record for the fastest milestone reached by an investment bank. In the same month, Goldman Sachs Group, Morgan Stanley, Bank of America Corp, and other major competitors facilitated the IPO of SpaceX, the largest IPO to date. Although Elon Musk's company ultimately paid very low commissions, it was still one of the highest-value transactions in Wall Street history. According to reports, the investment banks underwriting the SpaceX IPO earned approximately $500 million in fees. Just days before SpaceX went public, Goldman Sachs Group's investment banking team urgently pushed forward one of the largest equity financing projects in history, helping Alphabet raise over $80 billion to fund its overall artificial intelligence expenses. A team led by Morgan Stanley analyst Manan Gosalia stated in their report that they "expect positive comments on reserve projects to continue, consistent with what we have heard this quarter, laying a foundation for strong development in the second half of the year and 2027." However, recent volatility in tech stocks has led the market to question whether a group of major IPOs in preparation can proceed smoothly. Last month, there were reports that OpenAI was considering postponing its IPO until next year, causing Morgan Stanley and Goldman Sachs Group's stock prices to fall. Interest rates expected to remain high for a longer period Traders continue to bet on the possibility that the Federal Reserve, under new chairman Kevin Warsh, may maintain high interest rates for a longer period of time, and the market will closely monitor the impact of this policy on bank performance. On one hand, high interest rates will increase banks' interest income from loans, thus boosting net profits. But on the other hand, high interest rates will increase the debt burden on residents, and some banks may have to set aside more provisions for loan losses to address potential bad debt risks. McGratty stated, "With the backdrop of 'interest rates expected to remain high for a longer period,' investors must consider more the possibility of profit margins peaking." Private credit turbulence beginning to ease The simmering turmoil in the private credit market that began at the beginning of the year has gradually eased, but some funds still face pressure from investor redemptions. McGratty pointed out that this area "is currently very calm," and he will closely monitor related statements in the financial reports of various institutions. In April this year, major banks disclosed their risk exposure in the private credit sector: JPMorgan Chase approximately $50 billion, Wells Fargo & Company approximately $36 billion, Citigroup approximately $22 billion, and Bank of America Corp approximately $20 billion. According to analysts at JPMorgan Chase, the growth rate of loans to non-bank financial institutions has slowed down, raising questions in the market: to what extent is this slowdown caused by the cooling down of the private credit business. The JPMorgan Chase analyst stated, "We are waiting for the financial reports to be released to determine whether this reflects a slowdown in the growth of private credit exposure."