Wall Street's Record Trading Streak Is Cooling, and Not Evenly
The Financial Times framed it bluntly on October 12: Wall Street's record-breaking trading streak is set to cool. JPMorgan, Goldman Sachs, Citigroup and Wells Fargo report third-quarter results before Tuesday's open, with Bank of America and Morgan Stanley following on Wednesday. For the first time in several quarters, the question on the desk is not how much the banks made, but how much of it happens again.
The records behind that streak are real. In the second quarter, JPMorgan's equity markets revenue rose 86%, Goldman Sachs' equities net revenues rose 72%, and Morgan Stanley booked record equity trading revenue of $6.3 billion. Goldman has now set an all-time quarterly record for stock trading three quarters running. By the FT's calculation, JPMorgan, Goldman, Citigroup and Bank of America together booked $19.3 billion of equity trading revenue in Q2, up 72% year on year. The Office of the Comptroller of the Currency puts aggregate U.S. bank trading revenue at $21.6 billion in the same quarter, up 32.5% sequentially and 30.6% from a year earlier. New York State comptroller Thomas DiNapoli reported $45.9 billion of securities-industry profit in the first half, up 51.3%, putting the sector on pace to exceed $90 billion in 2026 versus last year's record $65.1 billion.
At Barclays' global financial services conference in mid-September, the language shifted almost in unison. Bank of America chief Brian Moynihan guided third-quarter sales and trading to "relatively flat" against the $5.4 billion posted a year earlier, with investment banking fees of $1.6 billion to $1.8 billion versus the roughly $2 billion analysts had modelled. "What we're seeing is the market generally in investment banking is down 10% or so," he said. JPMorgan co-president Doug Petno previewed a "seasonal sequential decline" from a record quarter while still guiding trading revenue to mid-to-high-teens percentage growth. Morgan Stanley co-president Dan Simkowitz was blunter: "I think it's safe to say, 3Q is no 2Q." Goldman's David Solomon called equities "very strong" and fixed income "a little bit softer."
On September 14, Bank of America closed down 5.1%, its worst session since April 2025; Goldman lost 3.9%, Citigroup 1.9%, and the S&P 500 banking index 2.7%. The trigger was a single word: flat. The bank had posted year-on-year trading growth for 17 consecutive quarters, and Moynihan called the fight for an eighteenth a "dog fight." He also told Bloomberg that a flat quarter would still rank among the firm's best third quarters ever: sometimes the market just stops doing things, and this is one of those times.
The second-quarter surge was built on one-off fuel: AI-stock enthusiasm, a speculative wave through Asian semiconductors, and a July AI-share rout. That fuel is gone. The VIX has averaged 18 this year, 9% below its 2019-2025 average; G5 currency volatility is running 15% below the same benchmark, and the MOVE index of rate volatility is 13% below the prior seven years. Deal-making followed. Reuters, citing LSEG data, reported global M&A of $993 billion in the third quarter, down 41% sequentially and the first quarter below $1 trillion since Q2 2025, with only 10 deals above $10 billion — the fewest since Q4 2024.
Bloomberg-compiled estimates put the five largest U.S. banks' third-quarter equity trading revenue near $19 billion: Goldman at $5.1 billion, Morgan Stanley at $4.9 billion, JPMorgan at $4.5 billion and Bank of America at $2.6 billion. Across Goldman, Morgan Stanley, JPMorgan and Bank of America, that is roughly $17.1 billion, down markedly from the second-quarter peak but still up 27% from $13.5 billion a year ago — a retreat from an anomaly, not a collapse. Fixed income is the weaker leg: more than $19 billion expected, below the more than $21 billion of Q2 and likely the softest quarter of the year, as the 10-year Treasury yield closed Friday at 5.24% after touching 5.35% on October 7, a level last seen in 2002. The Fed raised rates 25 basis points to 3.75%-4% on September 16, its first increase since 2023.
Shareholders have already paid. The five largest banks have shed roughly $270 billion in market capitalization from their summer highs through October 9. Over the past month the KBW Nasdaq Bank Index fell 9.7% while the S&P 500 gained about 1.5%, making the third quarter the index's worst since the regional banking crisis of early 2023. "For the first half of the year it's almost like everybody won, and now that might not be the case," Wells Fargo analyst Mike Mayo said. "There's likely a wider dispersion this quarter between the winners and losers."
LSEG estimates have all six banks growing earnings per share year on year. Not everyone is bearish. Barclays' Jason Goldberg expects "a very strong quarter for equity trading revenues" and says it "will still be the best third quarter ever for our coverage in terms of overall trading revenues." Morgan Stanley's Manan Gosalia and Wells Fargo's Mike Mayo both argue the sell-off is overpriced. The next variable sits in the fourth quarter: Anthropic's planned November IPO at roughly a $2 trillion valuation, with Morgan Stanley, Goldman, JPMorgan and Citi leading the underwriting, which could refill the fee pipeline that M&A and listings have drained.