Key facts
- Wall Street banks reported uneven third-quarter results due to market turmoil.
- Equity and bond markets were affected by ongoing wars, rising inflation, and AI spending concerns.
- JPMorgan Chase saw market volatility dampen dealmaking and reduce bond trading.
- Wells Fargo also noted slowing activity in September.
- JPMorgan's markets division revenue climbed 15% year-on-year in Q3.
- Goldman Sachs' equities revenue was boosted by volatile markets.
Wall Street's investment banking and trading divisions experienced an uneven third quarter, with market turmoil impacting dealmaking and trading volumes. JPMorgan Chase, Wells Fargo, and other major financial firms saw their results affected by ongoing geopolitical conflicts, persistent inflation, and concerns surrounding significant investment in artificial intelligence.
Executives noted that a sharp increase in the benchmark 10-year Treasury yield, coupled with equity market volatility, led to a slowdown in client trading activity, particularly in the final weeks of September. This environment has interrupted corporate dealmaking, with the initial public offering (IPO) market losing momentum, potentially threatening what could have been a strong year for investment banking.
Despite the slowdown, JPMorgan executives indicated that the investment banking pipeline remains robust, with many potential deals likely to be delayed rather than canceled. The bank's markets division reported a 15% increase in revenue year-on-year, with equity markets revenue surging 49% as investors adjusted portfolios amid global interest rate uncertainty and rising energy prices.
Goldman Sachs also exceeded third-quarter profit expectations, benefiting from steady dealmaking and increased equities revenue driven by volatile markets. However, its fixed income, currency, and commodities business saw a 1% revenue drop. Analysts expressed concern about the sustainability of the strong performance in equities trading, which appeared to be the primary driver of positive results for several bulge bracket firms.