By Manya Saini
April 16 (Reuters) - Major U.S. banks delivered a split picture this week, as Middle East-linked market volatility lifted trading in the first quarter but clouded dealmaking prospects.
Bank earnings are tracked beyond Wall Street, as they offer a real-time read on how households and businesses are navigating still-higher borrowing costs, spending pressures and an uncertain economy.
Below are key trends from the first-quarter results at top U.S. banks, which often set the tone for the broader
earnings season:
TRADING DESKS WIN BIG
It was an extremely choppy quarter for markets, fueled by a selloff in global technology stocks on AI disruption fears, the Iran war and worries about the private credit sector.
Wall Street traders emerged as the biggest winners from the market turmoil that spread across virtually every asset class, including equities, fixed income and commodities.
WILL DEALMAKING FINALLY HAVE ITS YEAR?
For years, top Wall Street banks have hoped dealmaking would break out of a slump. And in 2026, that started to materialize, with several big-ticket deals, and Elon Musk's SpaceX preparing for the biggest initial public offering of all time this summer.
However, volatile markets have tempered that optimism, with analysts flagging an uneven path forward for deals, if the war stretches out.
"The banks were understandably reticent to be too bullish in their outlook statements, given the range of possible outcomes to the Middle Eastern conflict and the peace talks," Russ Mould, investment director at AJ Bell, told Reuters.
SPOTLIGHT ON LENDING AND CREDIT TRENDSInterest income rose across the big four U.S. lenders in the first quarter as loan demand rebounded.
Borrowers were encouraged to take on debt again, but signs of softness in labor markets and limited visibility on the Federal Reserve's rate path are likely to keep banks cautious.
Credit quality remains broadly stable, with banks flagging only modest changes even as investors watch for signs of stress, especially around the banks' private credit business. This also supported loan growth across the sector, as rising credit losses typically prompt lenders to tighten.
"Private credit is still just a smaller part of the overall credit spectrum. While there are some major headlines, the banks are in great shape to weather what's going on," said Macrae Sykes, portfolio manager at Gabelli Funds, which holds several large-cap bank stocks.
HOW RESULTS STACKED UP AGAINST EXPECTATIONS
Profits increased and beat analysts' estimates at all six major banks, powered by trading and dealmaking strength.
STOCK PERFORMANCE
An index tracking large-cap bank stocks has lost 1.8% this year through April 14 close, compared to a 2% gain for the broader S&P 500 index, amid worries around private credit and economic uncertainty.
Here is a rundown of Reuters' coverage of big banks' first-quarter earnings:
• JPMorgan profit beats expectations on record trading revenue, strong dealmaking
• Bank of America beats profit estimates as trading, investment banking shine
• Wells Fargo misses expectations on interest income, revenue; shares fall
• Citi profit beats estimates as market volatility lifts trading revenue
• Goldman Sachs beats profit estimates, weak fixed income trading drags down shares
• Morgan Stanley's profit beats estimates on record trading revenue, dealmaking boost
(Reporting by Manya Saini in Bengaluru; Editing by Sweta Singh and Sriraj Kalluvila)
