FiscalFusion

Wall Street had one of its most profitable quarters ever, if the earnings from four of the nation’s biggest banks that reported Tuesday are to be believed, as the companies were helped by a flurry of deal making, soaring stock prices and a global economy that remains resilient despite tariffs and geopolitical upheaval. Despite the strong earnings from JPMorgan Chase, Citigroup, Wells Fargo and Goldman Sachs, bank executives expressed various degrees of caution about the markets and the economy, including worries that asset prices in some markets have gotten overinflated. “While there have been some signs of a softening, particularly in job growth, the U.S. economy generally remained resilient,” said Jamie Dimon, chairman and CEO of JPMorgan Chase, in prepared remarks. “However, there continues to be a heightened degree of uncertainty stemming from complex geopolitical conditions, tariffs and trade uncertainty, elevated asset prices and the risk of sticky inflation,” he added.

JPMorgan Chase said it had a profit of $14.39 billion, or $5.07 a share, up 12% from a year earlier. The other big banks fared just as well, or better. Wells Fargo earned $5.59 billion in profits in the quarter, up 9% from a year earlier. At Citigroup, the bank had a third-quarter profit of $3.75 billion, up 16%, and Goldman Sachs posted a 37% jump in profits, earning $4.1 billion. JPMorgan’s consumer banking division had a particularly strong quarter, partly driven by its credit card business, with consumers spending more, borrowing more and carrying balances longer; it also upgraded its Chase Sapphire Reserve card this summer, sparking a wave of refreshes among high-fee cards.

Other banks also reported strong consumer spending, including Wells Fargo, which saw credit and debit card usage rise across all demographics, and Citigroup, which also reported robust card spending. None of the banks added significant sums to their loan-loss reserves in the quarter. Along with solid consumer spending, Wall Street is experiencing one of its best years in deal making in a long time. Initial public offerings have returned, AI companies have raised tens of billions to build data centers, and private equity is booming, including a recent $55 billion buyout offer for Electronic Arts. At Goldman Sachs, investment banking revenues rose 42% to $2.66 billion, and commission and fee revenues increased 27% thanks to a surge in M&A advisory work.

Citigroup and JPMorgan also saw significant increases in investment banking and corporate lending revenues. But despite the soaring stock market and deal activity, executives expressed caution about how long the boom can last, pointing to record or multidecade highs in safe-haven assets like gold and silver, the ongoing U.S.-China trade war involving key goods like steel and soybeans, and skyrocketing stock prices for companies linked to artificial intelligence. “There’s obviously a lot of uncertainty that still persists around tariffs, around inflation, around what it could mean for the labor market,” said Mark Mason, CFO of Citigroup, who also described some markets as “frothy.” Dimon voiced similar concerns, saying, “You have a lot of assets out there which look like they’re entering bubble territory.” Investors have been watching the big banks closely as a proxy for the overall economy while the U.S. government remains shut down and key economic data is delayed or unavailable, with banks traditionally kicking off earnings season. On Wednesday, results are due from Bank of America and Morgan Stanley, and American Express will report on Friday..