Wall Street banks post stronger earnings on trading and deal fees

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Wall Street banks earnings

Highlights

JPMorgan, Bank of America, and Goldman Sachs report Q2 profit and fee growth, with Goldman Sachs and Morgan Stanley sharing $500 million in fees from the SpaceX IPO valued at nearly $86 billion.
Dealogic shows global investment banking revenue hits $61.4 billion for H1 2026, up 24% year-over-year, driven by high-profile IPOs like Cerebras' $6.4 billion debut and Alphabet's $85 billion share sale.
Despite strong results and share gains—Goldman Sachs +4%, Citi +1%, Bank of America +1%, JPMorgan +0.7%—executives warn of market risks from high leverage, elevated valuations, and geopolitical tensions.

Second-quarter revenue drivers come into focus

As reported by Reuters, large U.S. banks are benefiting from a surge in fees tied to mergers, acquisitions and equity issuance, alongside strong trading revenue during volatile markets.

Bank of America beats second-quarter profit estimates, helped by record trading activity and a pickup in dealmaking, while JPMorgan reports that big-ticket IPOs and other transactions push investment banking fees to their highest level since 2021. Bank of America Chief Financial Officer Alastair Borthwick says the bank has seen strong global markets and investment banking performance, while JPMorgan Chief Financial Officer Jeremy Barnum describes equities activity as booming amid large IPOs and the AI theme.

The SpaceX initial public offering is a major contributor to that backdrop. Goldman Sachs and Morgan Stanley are among the banks playing significant roles in the nearly $86 billion offering, with banks on the deal collecting about $500 million in fees.

Deal activity across the quarter also includes Cerebras' $6.4 billion IPO and Alphabet's $85 billion share sale. Dealogic data show global investment banking revenue reaches $61.4 billion in the first half of 2026, up 24% from a year earlier, with JPMorgan remaining the global leader in investment banking revenue and Goldman Sachs leading in M&A advisory.

Market gains are tempered by risk warnings

Investors are responding unevenly to the earnings updates. JPMorgan shares rise 0.7%, Citi gains 1%, Bank of America adds 1% and Goldman Sachs jumps 4%, while Wells Fargo falls 1.7%.

Even with the stronger results, executives are warning that the market backdrop carries notable risks. Barnum says high leverage and elevated valuations raise questions about how fragile or overheated the current environment may be, while Citi Chief Financial Officer Gonzalo Luchetti says conflict in the Middle East may affect deal activity over time even though the pipeline remains strong.

JPMorgan Chief Executive Jamie Dimon says in the bank's press release that geopolitical tensions, wars, sticky inflation, large global fiscal deficits and elevated asset prices are shifting below the surface and could cause meaningful disruptions. Goldman Sachs exceeds second-quarter profit expectations, Wells Fargo also beats Wall Street estimates, Citigroup reports a 45% jump in second-quarter profit and its highest quarterly revenue in a decade, and Morgan Stanley is due to report on Wednesday.

Analysts say the broader backdrop remains supportive for the sector. Macrae Sykes of Gabelli Funds says earnings are turning out stronger than expected and that business activity, market engagement and demand for capital remain constructive for major banks, while Argus Research's Stephen Biggar says the AI-driven capital spending cycle is supporting equity issuance, M&A and debt financing, with trading also helped by Iran-related volatility.

In our earlier article on Citigroup’s second-quarter results, we highlighted how market volatility and a pickup in dealmaking helped drive the bank’s strongest quarterly revenue in a decade. We also noted that trading strength across equities and fixed income, alongside rising investment banking fees tied to AI-related transactions, supported a sharp jump in profit and improved returns.

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