Wall Street trading forecasts expose banks' widening gap

Wall Street banks face diverging trading results as analysts forecast almost $19 billion in quarterly equity revenue ahead of earnings.

The third-quarter forecasts suggest strength in stock trading alongside weaker bond-market businesses and an uneven recovery in investment-banking fees. With earnings announcements due next week, analysts are questioning whether banks can sustain the capital-markets momentum recorded earlier in 2026.

Goldman leads the equity forecasts

Analysts put Goldman Sachs Group Inc. first among the banks listed in the equity-trading forecasts, projecting $5.1 billion in revenue against $4.9 billion for Morgan Stanley. Estimates for JPMorgan Chase & Co. stand at $4.5 billion, compared with $2.6 billion for Bank of America Corp.

That prospective ranking comes after a first half in which trading strength extended broadly across the largest US banks. Wells Fargo & Co. analyst Mike Mayo said: "There’s likely a wider dispersion this quarter between the winners and losers."

Investment-banking fee estimates also point to different growth rates rather than a uniform expansion. Analysts forecast a 15% year-over-year increase at JPMorgan, compared with 8.1% at Goldman and 1.9% at Morgan Stanley.

Bond desks face a weaker quarter

Across five major US banks, analysts expect fixed-income trading revenue to exceed $19 billion, below the second quarter’s total of more than $21 billion. Their forecasts would make the third quarter the weakest of the year so far for those businesses.

Bank of America Chief Executive Officer Brian Moynihan warned in September that the bank expected a quarterly decline in fixed-income trading. Bank of America analyst Ebrahim Poonawala separately forecasts weaker capital-markets activity during the latter half of 2026 than during the opening six months.

Jefferies Financial Group Inc. provided an early example of that split in its September results. The firm reported records in investment banking and equities trading alongside a 26% decrease in fixed-income net revenue; the supplied figures do not specify the comparison period for that decline.

Higher rates present competing possibilities for lenders: more interest income on customer borrowing, but tougher conditions for securities businesses. Mayo pointed to refinancing requirements over the coming three years as support for debt underwriting, while warning that further rate increases could weaken bond demand.

Funding costs complicate the fee outlook

Morgan Stanley analyst Manan Gosalia attributed bank-share weakness to slower capital-markets revenue growth, funding expenses and concerns about artificial-intelligence tools that could redirect customer cash. Those concerns describe a potential deposit-management risk, not evidence that such tools have already caused measurable outflows.

Gosalia also sees financing opportunities in AI infrastructure spending, which he expects to support capital markets over several years. His assessment places banks on both sides of the technology debate: possible pressure on deposits alongside demand for financing.

If refinancing and AI-related investment sustain issuance, banks could earn underwriting fees while companies retain access to capital for investment. For Goldman, that would offer support beyond its projected equity-trading lead; for the wider banking sector, it would provide another revenue source if bond trading remains weaker.

If rates rise further and bond demand softens as Mayo warns, refinancing could become harder for corporate borrowers. The coming results will provide a test of the revenue forecasts, while management commentary can clarify whether weaker trading conditions are extending into financing activity.