Bank Earnings Beat as Equities Trading Blows Past Forecasts

A Trading Windfall Bigger Than Expected

Wall Street went into second-quarter bank earnings expecting a strong trading quarter. The results were stronger than that. Ahead of the reports, analysts projected that JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley would together generate nearly $39 billion in trading revenue. Volatile markets over the preceding months had pushed clients to trade more, and equities desks were expected to approach the records set in the first quarter 5.

The reported numbers beat those forecasts by wide margins. JPMorgan, Bank of America, Citigroup, Wells Fargo and Goldman Sachs all reported Tuesday, and all topped expectations, with equities trading a common source of strength 1. Morgan Stanley reported on Wednesday and followed the same pattern 2. Analysts then raised their price targets.

Goldman and Morgan Stanley Lead the Surge

Goldman Sachs had the largest outperformance. Before earnings, its equities business was described as on track for a record quarter with more than $5 billion in revenue 5. It reported $7.42 billion instead, up 72% and roughly $2.3 billion above estimates 1. Total revenue rose 39.5% from a year earlier to $20.34 billion, against a consensus of $16.13 billion. Earnings per share rose 92% to $20.98, compared with the $14.48 analysts expected 3. Goldman also co-led SpaceX's record-setting IPO during the quarter, which added to an already busy period for deal fees 31.

Investors reacted quickly. Goldman shares rose about 7.5%, on pace for their best day in more than a year, and touched an intraday record near $1,136 3. CNBC's investing club raised its price target after the quarter, citing the results and CEO David Solomon's optimistic outlook as signs the market environment favors Goldman's strengths 3.

Morgan Stanley posted record quarterly revenue and profit. Net revenue rose 27% to $21.35 billion. Net income climbed 58% to $5.58 billion, or $3.46 per diluted share, versus expectations of $2.94 on $19.64 billion in revenue 2. Equities trading revenue jumped 69% to $6.3 billion from $3.72 billion a year earlier, about $1.9 billion more than the roughly $4.4 billion StreetAccount analysts expected 2. Keefe, Bruyette & Woods had said before earnings that banks with exposure to Asian equity markets, including Morgan Stanley, would likely benefit from the quarter's market swings 5. The firm said its gains were broad across businesses and regions 2.

JPMorgan: A Beat Plus Better Guidance

JPMorgan's adjusted EPS was $6.14. Coverage differed slightly on the benchmark: LSEG's consensus was $5.85 1, while another tally put it at $5.79 4. The revenue figures also varied depending on how they were calculated. Adjusted revenue excluding gains on Visa and other equity investments was $52.42 billion against a $50.19 billion estimate 1. Managed revenue was reported at $58.02 billion against expectations near $50.20 billion 4. The cleaner adjusted figure still shows a beat of more than $2 billion.

JPMorgan's guidance may matter more than the quarter itself. The bank raised its 2026 net interest income outlook to about $105.5 billion from $103 billion. Excluding Markets, the forecast rose to about $96.5 billion from $95 billion. It also cut its projected card net charge-off rate to roughly 3.2% from 3.4% 4. Lower expected credit losses suggest management is fairly confident in consumer health, a topic bank CEOs addressed on their calls alongside their plans for artificial intelligence 1.

Analysts responded. KBW's David Konrad kept an Outperform rating and raised his target from $370 to $384, and Barclays was among the other firms updating views 4. The stock's reaction was smaller than Goldman's: shares rose about 0.5% to $344.59 on Wednesday 4. That gap fits the business mix. JPMorgan's revenue is spread across lending and consumer banking, so a trading surge moves its results less than it moves those of the two firms most focused on markets.

What It Means

The common thread is that consensus estimates underestimated how much trading income volatility would produce. Analysts expected strong results and still missed by billions at individual firms. When that happens, price targets rise and estimates for the rest of the year usually follow.

That should not be read as a permanent change in earnings power. Trading revenue depends on market conditions, and the volatility that drove this quarter could fade. Strong comparisons also make next year's results harder to match. Several factors may last longer, though: active IPO markets, highlighted by the SpaceX deal, JPMorgan's higher interest income forecast, and its improved credit outlook. These suggest the quarter reflected more than a single burst of trading. For now, the biggest banks are earning more than analysts expected in this environment, and price targets are being revised upward to reflect it.