Profits at major U.S. banks exceeded expectations in the first quarter, boosted by a surge in stock trading. However, executives cautioned about economic uncertainty due to sweeping tariffs that could increase risks and hinder economic growth. Equity traders at JPMorgan Chase and Morgan Stanley achieved record revenue amidst a strong market performance early in the year, while Wells Fargo saw an increase in client fees. Concerns were raised about the impact of President Donald Trump’s tariffs, which have unsettled markets and could potentially lead to inflation and economic downturn.
The first quarter was a promising start to the year, but the outlook for the second quarter remains uncertain, with potential implications for markets and business activities. Consumers and corporations are showing caution in response to the tariffs, adjusting their behavior as import levies take effect. Corporate clients are adopting a wait-and-see approach, as policy uncertainty hampers long-term planning.
Executives anticipate that companies reporting results in the coming weeks may retract their earnings forecasts due to the prevailing uncertainty. Wall Street executives, including JPMorgan CEO Jamie Dimon, have expressed concerns about the economic impact of tariffs. Market reactions have been mixed, with JPMorgan’s shares rising, while Morgan Stanley and Wells Fargo saw declines.
Investment banking emerged as a strong performer, with JPMorgan experiencing a 12% increase in fees and Morgan Stanley achieving an 8% rise in revenue. Despite the challenges posed by tariffs, some remain optimistic about the resilience of banks in the current environment. Morgan Stanley’s CEO Ted Pick expressed confidence in the U.S. economy’s ability to avoid recession, highlighting a steady deal pipeline despite client hesitancy caused by uncertainty.
Overall, the banking sector faces uncertainties related to tariffs, inflation, and market volatility, prompting a cautious approach among clients and investors alike.
“Prepare for what’s ahead,” advised Colin White, CEO and portfolio manager at Verecan Capital Management. (Reported by Nupur Anand, Saeed Azhar, and Tatiana Bautzer in New York, with additional reporting by Nivedita Balu. Written by Lananh Nguyen; edited by Rod Nickel)
