Major U.S. banks outperformed in the first quarter of 2025, with strong gains in stock trading helping to beat profit forecasts. However, executives warned of gathering economic headwinds, particularly those stemming from new U.S. tariffs.
Trading Drives Early-2025 Surge
Favorable market conditions early in the year saw JPMorgan Chase and Morgan Stanley post record revenues from equity trading. Wells Fargo also benefited from a rise in client fees, boosting its performance.
Yet, the optimism came with caution. Financial executives flagged growing concerns that President Donald Trump’s sweeping tariff policies could destabilize the economy and rattle markets.
Uncertainty Clouds the Future
While Q1 showed strong results, there’s less clarity about what lies ahead. “The first quarter was a pretty good start to the year in terms of trading and even business activity, but what happens in the second quarter is still unknown,” said Brian Mulberry of Zacks Investment Management. “It is going to be a tale of two different quarters.”
JPMorgan CFO Jeremy Barnum noted that consumer behavior is already shifting. “You’re starting to see maybe a little bit of pivoting from consumers pre-buying stuff that might be getting more expensive,” he said.
Corporate clients, meanwhile, are holding back due to policy uncertainty. JPMorgan CEO Jamie Dimon stated that companies might pull or delay earnings forecasts as the trade outlook remains unclear.
Stock Movements Reflect Mixed Sentiment
JPMorgan shares climbed 2.5% following its earnings release. Meanwhile, Morgan Stanley and Wells Fargo stocks dropped by 1% and 3.5% respectively. Wells Fargo’s losses deepened after CFO Michael Santomassimo warned that net interest income would likely be at the lower end of guidance due to market instability.
Santomassimo added that clients are pausing major decisions: “Corporate and commercial banking clients are taking a step back saying, ‘I need to get more clarity, certainty about where things are going.’”
Investment Banking Remains Resilient
Despite wider concerns, investment banking held up well. JPMorgan saw a 12% increase in fees, while Morgan Stanley posted an 8% revenue bump.
Ted Pick, CEO of Morgan Stanley, expressed more optimism than his peers. He acknowledged inflation and tariffs as risks but emphasized that deal pipelines remain strong, with some transactions merely delayed—not canceled.
Colin White, CEO of Verecan Capital, offered a blunt summary of the current sentiment: “The emperor has no clothes right now. It’s obvious that nobody knows what’s coming.”