Private capital giants Blackstone and Apollo have seen shares fall over 15% this year and 20% over the past 12 months, while major banks Goldman Sachs, Morgan Stanley, JPMorgan and Citigroup rose over 18% in the same period. This marks a dramatic reversal from the past decade when private capital outperformed.

Banks benefited from a record IPO boom including SpaceX, a surge in megadeals, and deregulation under President Trump. Private capital groups have only modest exposure to hot IPOs and AI startups, and suffered earlier this year from rising redemptions at large credit funds. Investors fear AI disruption to software and services companies that drove private market growth, while high interest rates from Trump's Iran policies and tariffs complicating PE exits have created a $4tn logjam of unsold deals.

Blackstone reports second-quarter earnings Thursday; investors will watch for fundraising strength and slowing redemptions. Analysts like Citizens Bank's Devin Ryan say the bank-driven capital markets recovery may eventually boost private markets, though Barclays warns the industry still lacks "true acceleration."