Interest rates are on the decline, U.S.-China trade tensions have heightened and markets have been on a wild ride of late. Against this backdrop, the largest banks of the United States reported earnings. The economic signal from these bank results remains positive so far despite concerns over non-bank lenders, especially after a few recent bankruptcies.Wall Street credit concerns have resurfaced lately, following a warning from JPMorgan Chase (JPM) CEO Jamie Dimon about “cockroaches” in the U.S. economy, as ...

Core Insights - Despite elevated interest rates and ongoing trade tensions, the largest U.S. banks continue to report strong financial results [1] - In Q2, the five largest U.S. banks saw a 17% increase in trading revenues and a 7% rise in investment banking revenues compared to the same quarter last year [2] Trading Performance - Volatility in the markets has become a business driver for banks' equities trading desks, with profits dependent on trade volume rather than market direction [3] - Banks have benefited from increased trading activity due to dramatic stock price swings, facilitating trades and collecting fees [4] Diversification and Resilience - The performance of financial services firms highlights the importance of diversification, allowing banks to thrive regardless of high interest rates or economic challenges [5] - Corporate clients remain active in pursuing mergers, issuing debt, and going public despite trade uncertainties, indicating a robust deal-making environment [6] Earnings Highlights - Morgan Stanley reported Q2 2025 earnings per share of $2.13, exceeding estimates and up from $1.82 a year ago, with net revenues of $16.79 billion, a 12% increase [7][8] - Goldman Sachs achieved Q2 EPS of $10.91, surpassing estimates and rising from $8.62 a year ago, with Global Banking and Markets revenues up 24% to $10.1 billion [9] - JPMorgan's quarterly earnings were $4.96 per share, beating estimates and up from $4.4 a year ago, with revenues of $44.91 billion exceeding expectations [10] - Wells Fargo reported adjusted EPS of $1.54, surpassing estimates and up from $1.33 in the prior year, while Citigroup's adjusted net income per share was $1.96, a 28.9% increase year-over-year [11] Investment Opportunities - Financials-based exchange-traded funds (ETFs) are expected to gain traction in light of the strong performance of banks, including iShares U.S. Financial Services ETF and Financial Select Sector SPDR [12]