Wall Street bankers have warned that the blockbuster trading gains that turbocharged profits in the second quarter are unlikely to be repeated, signaling a potential slowdown in banks’ market businesses. Executives from the largest US banks noted at an industry conference that trading revenue growth had started to slow after unprecedented performance in Q2, when frenzied trading in AI-linked stocks drove earnings to record levels. Bank of America’s CEO Brian Moynihan said sales and trading revenue would be “flat” in Q3, causing a 5 per cent drop in the bank’s shares and pressuring rivals’ stock prices.

While JPMorgan Chase projected “high teens” percentage trading growth year-on-year and Citigroup forecast a mid-single-digit increase for its markets unit, these outlooks mark a clear deceleration from Q2’s extraordinary results. Daniel Simkowitz, Morgan Stanley co-president, stated, “Second quarter of this year was pretty exceptional in markets… 3Q is no 2Q.” Doug Petno, JPMorgan co-president, expected a “seasonal sequential decline” following a record quarter. The combined equities trading revenue of JPMorgan, Goldman Sachs, Citigroup, and Bank of America surged 72 per cent year-on-year to $19.3bn in Q2, fueled by AI-linked stock investments, Asian semiconductor speculation, and SpaceX’s IPO.

Though some trends are weakening — Moynihan cited slowed financing activity in Asia and reduced prime broking — Goldman’s David Solomon affirmed the equities business remains strong, though fixed income, currencies, and commodities revenue may soften. Despite the slowdown, banks see structural demand in prime broking and structured financing as enduring trends, with Solomon noting long-term market cap growth will support financing availability over the next decade.