Big banks are trying to put Trump tariff tumult in their rear-view mirror
- - - Big banks are trying to put Trump tariff tumult in their rear-view mirror
David HollerithJuly 14, 2025 at 2:00 AM
What a difference a quarter makes for the mood surrounding the nation's largest banks.
Three months ago, a sense of gloom hovered over the first quarter earnings season as bankers grappled with a dealmaking freeze and the market chaos that followed President Trump's April 2 "Liberation Day" tariff announcement, with some warning of "considerable turbulence" and a possible recession.
That gloom has been replaced by measured optimism in the lead-up to the start of another earnings season this week, which starts Tuesday with JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C).
In April, it felt like "the world was coming to end, and these banks were going to be in trouble because of the high uncertainty,” CFRA Research's Ken Leon told Yahoo Finance. But "we haven't seen that.”
Some red-hot IPOs and sizable mergers have helped, as have several developments in Washington, D.C., while the Trump administration begins to loosen capital and supervisory rules for big banks. Even the volatility triggered by Trump's tariffs turned out to be a boost for Wall Street trading desks as investors churned through their bets.
The CEOs of the big banks that will report earnings this week. From left to right: Wells Fargo's Charles Scharf, Bank of America's Brian Moynihan, JPMorgan Chase's Jamie Dimon, and Citigroup's Jane Fraser. (Saul Leob/AFP via Getty Images) (SAUL LOEB via Getty Images)
Many big banks have also announced fresh plans for stock buybacks and dividends after passing their annual Federal Reserve stress test, pushing investor enthusiasm to a new peak on July 3 when the stock prices of JPMorgan, Goldman Sachs (GS), and Morgan Stanley (MS) notched all-time record highs.
What many investors will want to hear from big banks in the coming week is that there is more reason to keep that momentum going, and that the challenges of April are now firmly in the rear-view mirror.
Read more: How to protect your money during turmoil, stock market volatility
"I do think investment banking specifically is a tale of two quarters, one that started slow, really pausing in a big way, and now it's picked up,” Morgan Stanley CEO Ted Pick said at a conference hosted by his firm in early June.
Some analysts agree with this optimistic view.
"Capital markets are back," Morgan Stanley analyst Betsy Graseck noted in early July.
Graseck and others predict that some banks, like JPMorgan and Goldman Sachs, might blow past their previous investment banking guidance this week, given the sharp pickup in the latter half of the quarter. Goldman Sachs reports on Wednesday, along with Morgan Stanley and Bank of America.
Barclays equity analyst Jason Goldberg has also argued there is a good chance big banks will beat Wall Street's quarterly earnings expectations.
Most have been "exceeding consensus expectations pretty handily over the past year," Goldberg wrote at the beginning of July.
Morgan Stanley CEO Ted Pick. (Reuters/Jeenah Moon) (REUTERS / Reuters)
But there are also some reasons for unease as banks continue to face a number of unknowns after the run-up in their stocks.
On Tuesday, HSBC analyst Saul Martinez downgraded the stocks of JPMorgan and Goldman Sachs from Hold to Reduce and Bank of America's stock from Buy to Hold. The moves were far from the first time an analyst covering big banks throttled back due in part to the lenders' rich stock prices.
The benefits of easing capital requirements, improved dealmaking, and unchanged interest rates are all "well priced in" at this point, Martinez said in a research note.
"Macro uncertainties remain and possible interest rate cuts and slower economic growth seem to be downplayed," he added.
Baird analyst David George offered similar caution in late June when he downgraded JPMorgan from Neutral to Underperform.
"We realize we are fighting the tape here, and understand that JPM is a best-in-class franchise, with dominant share in all of their businesses," George wrote.
But "we simply think that expectations are super high here," he added.
Jamie Dimon, CEO of JPMorgan Chase, at the US Capitol on Feb. 13. (Tom Williams/CQ-Roll Call, Inc via Getty Images) (Tom Williams via Getty Images)
JPMorgan CEO Jamie Dimon is one bank executive who isn't exactly optimistic about the markets heading into Tuesday's release of his company's results.
Last Thursday, at an event in Dublin with Deputy Prime Minister Simon Harris, he said that "unfortunately, I think there is complacency in the markets" about tariffs and that higher interest rates from the Federal Reserve are still possible.
"I think the possibility of those higher rates are higher than anyone else thinks," he said. "If the market is pricing a 20% chance, I'm pricing in a 40% to 50% chance."
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance. His email is [email protected].
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