Has Wall Street's Record Run Peaked?

Big banks open third-quarter reporting this week off a record first half, and the numbers behind the run point in two directions at once.

Bellwize Analysis weighs the public evidence around a market question. It is general information — not a forecast, and not investment advice.

Wall Street heads into its third-quarter reports off a first half that set records, and the figures behind that run do not point in one direction. The biggest banks open the season on Tuesday, led by JPMorgan and Goldman Sachs. Five more follow by Thursday. Each one carries the same question: was the first half a new level, or the top of a cycle?

A record pace, with deals still closing

The firms are not reporting from a position of weakness. New York State Comptroller data put first-half pretax profits at the state’s broker-dealers at $45.9 billion, up 51% from a year earlier and on track to clear $90 billion for the full year. The 2025 total, $65.1 billion, was itself a record.

The most recent quarter showed where the strength sat. Goldman Sachs reported second-quarter equities revenue of $7.42 billion, up 72% from a year earlier, inside net revenues of $20.34 billion that rose 39%. Dealmaking has reopened alongside the trading desks. Goldman has crossed $1 trillion in announced mergers and acquisitions this year and holds the top advisory ranking, and bankers point to an initial-public-offering market that reached a five-year high in proceeds over the summer. Analysts have moved with the tape. The consensus for JPMorgan’s third-quarter earnings, near $5.93 a share, has climbed roughly 8% over the past three months, a sign the Street expects the momentum to extend rather than stall.

The spring set a bar the summer may not clear

The same Comptroller report cuts the other way. Trading revenue itself grew just 1.8% in the first half, to $40.3 billion; the profit jump came from fees on deals and offerings, the most cyclical lines a bank runs. Strip out the dealmaking and the trading engine was closer to flat.

The comparisons now turn punishing. Goldman’s second-quarter equities haul of $7.42 billion sets a bar that consensus for the third quarter puts at $4.68 billion. Chief Executive David Solomon told a Barclays conference that fixed-income activity had softened during the quarter after a strong start to the year, and estimates compiled by Bloomberg have fixed-income trading across five large banks slipping toward $19 billion from more than $21 billion in the prior quarter. Forecasts have followed. Goldman has seen more than a dozen downward earnings revisions over the past month with no offsetting raises, and its revenue is pegged to fall about 17% from the second quarter.

What the data shows

The market has already drawn its own line between the two readings. Over the past three months the trading-heavy names have lagged the diversified ones. Goldman is down 18% and sits 23% below its 52-week high, and Morgan Stanley is off 13%. JPMorgan has done the opposite, up nearly 8%, with Wells Fargo and Bank of America little changed. The split tracks the mix. Firms that lean hardest on trading and deal fees have given back the most, while lenders with broad deposit and card books have held. The financials sector rose 0.9% on Friday, in the middle of the pack.

The backdrop is quiet for now. The VIX closed Friday at 15.17, low against the quarters that produced those trading hauls, and the 10-year Treasury yield sits at 5.22%. Volatility is the raw material trading desks work with, and the tape is not pricing much of it.

What would settle it

The reports answer it directly. JPMorgan, Goldman Sachs, Wells Fargo and Citigroup publish Tuesday, Bank of America and Morgan Stanley on Wednesday, and Charles Schwab on Thursday. Three lines will carry the debate: the path of trading revenue against that record second quarter, the run-rate on investment-banking fees and the deal backlog behind them, and any guidance on the fourth quarter.

The macro calendar adds one more marker. The September inflation report lands Wednesday, with headline prices forecast at 3.7% year over year. A hotter number keeps yields elevated and complicates the rate path every one of these banks lends into.

For now the record and the slowdown sit side by side in the same filings. First-half profits ran at a pace the industry has not seen, while the quarter being reported began lapping comparisons that were already extraordinary. The reports this week will show which half of that sentence the third quarter belonged to.

This is a general-market summary for information only — not investment advice, and not a recommendation regarding any security.