(L-R) Brian Moynihan, Chairman and CEO of Financial institution of America; Jamie Dimon, Chairman and CEO of JPMorgan Chase; and Jane Fraser, CEO of Citigroup; testify throughout a Senate Banking Committee listening to on the Hart Senate Workplace Constructing in Washington, D.C., on Dec. 6, 2023.
Saul Loeb | Afp | Getty Photographs
Practically in every single place you look on the planet of finance, issues are going surprisingly properly — no less than for now.
Wall Road is buzzing due to a increase in inventory and bond buying and selling and a pickup in companies buying opponents and taking out huge loans. On the similar time, Fundamental Road is holding up because the American shopper continues to spend, borrow and repay loans, in response to reviews this week from the biggest U.S. banks.
It makes for an unusually worthwhile surroundings for monetary companies. The six largest U.S. banks generated about $39 billion in second-quarter revenue, outstripping analysts’ expectations and collectively leaping greater than 20% from core earnings a yr in the past.
It is a outstanding outcome after a tumultuous begin to the quarter. The interval started with shock and plunging markets on April 2 over President Donald Trump’s sweeping “Liberation Day” tariffs. JPMorgan Chase economists stated on the time that the insurance policies would most likely trigger a recession this yr.
However markets roared again after Trump responded to misery alerts coming from U.S. bonds and delayed probably the most punishing tariffs on most buying and selling companions. Traders have begun to tune out the administration’s barrage of tariff pronouncements as bluster or noise, and company leaders are stepping off the sidelines to drag off multibillion-dollar transactions, financial institution outcomes present.
“Look how far the world’s are available three months,” Wells Fargo banking analyst Mike Mayo instructed CNBC. “All through the quarter, you had a pickup in funding banking, mortgage progress and optimism with financial situations. Right here we’re, with speak of a recession just about absent.”
That dynamic was clear at JPMorgan, the biggest and most worthwhile U.S. financial institution. It produced about $15 billion in quarterly revenue, which is almost as a lot as the following three largest banks mixed.
Buying and selling benefited from turbulent situations within the quarter as Trump roiled markets with quickly evolving coverage statements. However the actual shock got here from funding banking, which includes mergers recommendation, IPOs and debt and fairness issuance. Income at JPMorgan jumped 7%, producing $450 million greater than analysts had anticipated, simply weeks after managers had warned of an approximate 15% decline.
“The pickup in funding banking charges, to some extent, displays folks accepting uncertainty and deciding to maneuver on with transactions,” JPMorgan CFO Jeremy Barnum instructed reporters on Tuesday. “The company group has type of accepted that they simply have to navigate via this.”
‘Smooth touchdown’
However the excellent news did not finish with company confidence. JPMorgan’s inner barometers for U.S. financial dangers cooled down from the primary quarter as a few of the worst-case situations had been taken off the desk, Barnum stated.
Which means it is much less seemingly {that a} recession will trigger a spike in U.S. unemployment this yr, hurting shoppers capacity to repay their money owed. That was clear within the financial institution’s provision for credit score losses, which was 14% smaller than within the first quarter.
The financial system is squarely within the “tender touchdown” situation, Barnum instructed reporters this week.
On the similar time, shoppers and firms are borrowing extra money from JPMorgan, the place mortgage progress rose 5% in contrast with a yr in the past, fueled by rising bank card and wholesale loans, the financial institution stated.
These stats imply that, no less than for now, banks are giving the all-clear sign on the U.S. financial system within the early months of the second Trump presidency. Even in a time marked by turbulence and rising geopolitical dangers, the financial system has defied expectations for a downturn.
“Banks are economically delicate companies, and so how the financial system performs beneath the administration goes to matter to their outcomes,” stated Matt Stucky, chief portfolio supervisor for equities at Northwestern Mutual wealth administration. “To this point, the financial system continues to push ahead.”
‘Firing on all cylinders’
The state of affairs even made JPMorgan CEO Jamie Dimon, who ceaselessly warns about dangers he sees, sound comparatively optimistic concerning the financial system.
“It has been resilient, and hopefully it will proceed to be,” Dimon instructed reporters this week. “It is at all times good to hope for the very best, put together for not the very best, and we’ll see… One factor I might level out, the world is way larger and way more diversified” now and that makes for a “barely extra steady international financial system than you had 20 years in the past,” he stated.
Merchants work on the ground on the New York Inventory Change (NYSE) in New York Metropolis, U.S., July 17, 2025.
Brendan McDermid | Reuters
Trump’s sweeping spending invoice, signed into regulation this month, preserves company tax charges and expands enterprise deductions. On high of that, deregulatory efforts throughout industries will increase the financial system, Dimon stated.
Final month, the Federal Reserve launched a proposal to amend the capital that banks want to carry for lower-risk belongings, probably liberating up billions of {dollars} for the banks that they may use to spice up share repurchases, purchase opponents or gasoline extra mortgage progress, executives stated this week.
Taken collectively, it is onerous to conceive of a greater setup for banks than proper now, Barnum stated.
“We’re primarily firing on all cylinders,” Barnum instructed analysts. “Charges are an excellent stage for us. Deal exercise is excessive. Capital markets are very robust. Client credit score is great. Wholesale credit score is great.”
To make certain, sentiment can shift on a dime, and dangers together with inflation, the mounting U.S. deficit and geopolitical turmoil are nonetheless on the market, Barnum famous.
Good occasions forward?
Even the banking trade’s former laggards are displaying indicators of a resurgence.
Wells Fargo CEO Charlie Scharf, recent off lastly eradicating the yoke of a Federal Reserve punishment that capped his financial institution’s stability sheet at 2017 ranges, sounded ebullient throughout an earnings name this week. His firm just lately gave all its staff a $2,000 bonus to have a good time the milestone.
“That is an extremely fascinating and enjoyable time,” Scharf instructed analysts Tuesday. “We’re beginning to see deposit flows, as we have talked about. We have got new account progress. We have got bills in verify. Credit score is performing properly… We’ve much less constraints.”
Citigroup shares have outpaced most monetary shares this yr.
The shares of one other former laggard, Citigroup, have climbed almost 30% this yr as CEO Jane Fraser convinces buyers her turnaround plan is working.
Fraser this week gave the impression of a CEO on the assault, disclosing the financial institution’s new luxurious bank card and plans to difficulty a Citi-branded stablecoin. She additionally marveled on the resiliency of the U.S. financial system.
“The energy of the U.S. financial system, pushed by the American entrepreneur and a wholesome shopper, has actually been exceeding expectations,” Fraser instructed analysts. “As I have been chatting with CEOs, I’ve but once more been impressed by the adaptability of our personal sector.”
