(L to R) Brian Moynihan, Chairman and CEO of Bank of America; Jamie Dimon, chairman and CEO of JPMorgan Chase; and Jane Fraser, CEO of Citigroup; testify during a Senate Banking Committee hearing at the Hart Senate Office Building on December 6, 2023 in Washington, DC.
Win Mcnamee | Getty Images
It is expected that when banks begin reporting their second quarter results on Tuesday, JPMorgan Chase And Bank of Americarevenues from trading stocks and fixed income will approach or even exceed the recordings set earlier this year.
This is a key part of what a seasoned analyst Mike Mayo of Wells Fargo calls the financial industry’s “sweet spot” right now. Both profit engines of banking – Wall Street and Main Street – are in growth mode at the same time.
America’s biggest banks are raking in growing fees to help companies tap markets, punctuated by last month’s giant announcement. SpaceX IPOwhile risk-taking traders also thrive amid geopolitical unrest, including Iran was fuels volatility across asset classes.
“You’ve seen the largest IPO in history, a pace of mergers that’s on track to be a record year, and a broadening of trading to include equities and fixed income across myriad geographies,” Mayo told CNBC.
The big banks’ quarterly results come at an exceptionally good time for the sector. After years of rising interest rates and inflation-fueled recession fears, lenders are benefiting from a rare combination of booming activity on Wall Street, resilient consumer credit and a long-awaited recovery in business lending.
“There’s not much more you can ask for,” Mayo said.
These trends, which coincide with the Trump administration’s efforts to ease banking regulations, have helped financial stocks outperform the broader market for two years in a row, Mayo noted. This streak also raises the stakes as investors look for signs that momentum can continue through 2027.
JPMorgan, Bank of America, Citi Group, Wells Fargo And Goldman Sachs are expected to release results early Tuesday, with Morgan Stanley report Wednesday.
“Big money generator”Revenues at the group’s investment bank could rise 26% from last year, while trading revenues could jump 14%, according to the KBW analyst. Chris McGratty.
Besides the hundreds of millions dollars in fees that SpaceX paid to banks – led by Goldman Sachs and Morgan Stanley – for the IPO itself, the companies collected fees for increase debt for the new public company, and also have a chance to manage the wealth of the new millionaires and billionaires.
On top of that, Goldman and Morgan Stanley likely raked in so-called soft dollars from SpaceX’s IPO, according to Jay Ritter, professor emeritus of finance at the Warrington College of Business at the University of Florida.
SpaceX CEO Elon Musk speaks on a remote screen from SpaceX headquarters in Starbase, Texas, ahead of the launch of SpaceX’s initial public offering (IPO) on the Nasdaq MarketSite in New York on June 12, 2026.
Adam Jeffery | CNBC
Soft dollars are essentially fees that hedge funds pay to investment banks for a slice of an oversubscribed IPO, Ritter said.
“The main source of money for investment banks in IPOs is not bank fees, but the ability to allocate shares to hedge funds and some active mutual funds that pay soft dollars,” he said.
At the same time, trading gains were driven by strength in stocks as stock markets climbed during the quarter, as well as increased activity in fixed income after the Iran conflict sent oil prices, interest rates and currencies swinging, McGratty said.
“Banks are doing a good job these days of capturing the upside of volatility, whereas in previous cycles they were caught out of the game,” McGratty said.
“Demand is back”But Mayo argued that the most important development this quarter could happen outside of Wall Street.
The less glamorous commercial lending sector could be turning a corner after years of weakness, as banks seek to wrest market share from private lenders and an artificial intelligence-fueled spending boom spreads to the rest of the economy, he said.
“Demand is returning as companies embrace uncertainty as the new normal and build that new factory, invest in factories and continue operations,” Mayo said.
This trend could benefit regional lenders, including
