Wall Street’s trading high will be hard to kick

Goldman Sachs group

13/10/2026 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Stephen Gandel
NEW YORK, Oct 12 (Reuters Breakingviews) - The problem with record highs is that, after notching one, desire for another grows. Wall Street's own analysts doubt the six largest US banks will all manage to keep pace with last quarter's peak $51 billion trading-revenue haul. Dips and spikes are inevitable, but major lenders have made a point of claiming such businesses produce “durable,” all-season revenue. If that starts to waver, CEOs might feel pressure to take more risk.
JPMorgan JPM.N, Bank of America BAC.N, Citigroup C.N, Wells Fargo WFC.N, Goldman Sachs GS.N and Morgan Stanley MS.N are expected to post decent third-quarter numbers this week, according to LSEG data. These projections suggest impressive resilience against geopolitical turmoil, deep economic uncertainty, and — more concretely — the collapse of Situational Awareness. The $45 billion hedge fund accounted for hundreds of millions of dollars in trading revenue at mega-banks. 
Nonetheless, analysts forecast combined earnings growth of nearly 6% from a year earlier. Beneath the sunny headline figure, however, performance varies greatly by business line.
Net interest income from traditional banking activities from taking deposits to making credit card and business loans is expected to rise 10% from a year earlier, based on Visible Alpha data. Trading revenue is expected to increase a healthy 12%, but it would be a third of last quarter's 36% rise. There's also wide divergence, with Bank of America tipping lower while Goldman rises 30%. Boss David Solomon can’t rest easy, though: his investment bank is expected to face the sharpest overall reversal among the group next year, with analysts penciling in an outright 8% decline.
Such swings should be normal when buying and selling stocks, bonds and commodities. Years of elevated volatility, however, combined with the growth of independent market makers like Jane Street and Citadel Securities, which receive services and leverage through Wall Street trading desks, have produced unusually consistent double-digit percentage growth. Meanwhile, investment banking, which initially boomed under President Donald Trump, is now slowing down. Revenue projects to be little changed next year, with M&A advisory fees seen rising just 6%.
It means banks will lean heavily on star traders. Markets divisions have absorbed large quantities of extra capital, and there are few better places to deploy it. As momentum fades, those assets will be a drag, making trading desks seem less productive. The temptation, at that point, will be to accept more risk to juice returns. After all, years of highs will make anything else feel distressingly low.
     
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CONTEXT NEWS
Major Wall Street banks Citigroup, Goldman Sachs, JPMorgan and Wells Fargo are due to report their financial results for the third quarter on October 13. Bank of America and Morgan Stanley plan to do the same on October 14.

(Editing by Jonathan Guilford; Production by Maya Nandhini)
((For previous columns by the author, Reuters customers can click on GANDEL/ stephen.gandel@thomsonreuters.com))