U.S. Banks Reap Rewards Amid Market Turmoil
Major U.S. banks are riding a wave of profits, reaping about $50 billion in the first quarter of this year, largely due to the volatile stock market stirred up by the conflict involving the U.S. and Israel in Iran.
Prominent Wall Street institutions saw a significant rise in profits, driven by an increased demand for trading services as investors distanced themselves from riskier stocks and bonds, favoring more secure options for their funds.
Both Bank of America and Morgan Stanley announced substantial gains, joining the ranks of Goldman Sachs, JPMorgan, Citi, and Wells Fargo—all of which reported strong first-quarter results. Together, these six banks posted profits amounting to $47.4 billion.
As market conditions wavered, investors have begun to pull back from companies impacted negatively by the turmoil in the Middle East. Disruptions in tanker operations through the Strait of Hormuz have led to rising energy prices, smirking inflation expectations, increased borrowing rates, and raising fears of a global recession.
This unrest in the market seems to have intensified worries about whether some AI companies are as valuable as previously thought, alongside renewed skepticism surrounding the quality of loans in the now-sinking private credit sector.
Nonetheless, the investor unease has proven to be a boon for many U.S. investment banks. Take JPMorgan, for instance: it reported first-quarter profits of $16.5 billion, marking a 13% increase from the previous year.
Goldman Sachs noted a 19% rise in its profits, totaling $5.6 billion for the quarter, which CEO David Solomon referred to as a “very strong performance despite the increasingly volatile market.” He mentioned in a discussion with analysts that the dynamics have shifted significantly since the onset of the year, particularly after the military engagement began in late February. Starting off, 2026 had somewhat of an optimistic tone. Markets were performing well, confidence seemed to escalate, and most clients were zeroing in on growth and strategic opportunities. But gradually, as time progressed, the macroeconomic environment started impacting sentiment.
Meanwhile, Bank of America, the country’s second-largest financial entity, reported a 17% growth in first-quarter profits, reaching $8.6 billion as market volatility ramped up trading activity. However, CEO Brian Moynihan noted that the bank’s leadership is well aware of changing risks, pointing to concerns that an extended conflict in the Middle East could hinder consumer spending, corporate earnings, and, ultimately, global economic progress.
The International Monetary Fund warned on Tuesday that further escalations in the Iran conflict could trigger a global recession. Net energy importers and developing nations are likely to suffer the most, including the U.S., where the IMF downgraded its 2026 growth projection by 0.1 percentage points to 2.3%.
This potential economic downturn might dampen profits for banks, limiting the demand for loans and mortgages while dissuading corporate clients from pursuing mergers and acquisitions that usually boost investment banking revenues.
In the meantime, U.S. banks are celebrating their first-quarter results: Citi reported a hefty 42% profit increase, totaling $5.8 billion, while Morgan Stanley clocked in with a 30% rise to $5.6 billion. Wells Fargo noted a 7% uptick, reaching $5.3 billion.
Many banks have opted to utilize some of their profits for share buybacks. For instance, JPMorgan set a new record with $8.3 billion spent, while Citi followed with $6.3 billion, the highest in two decades. Goldman Sachs allocated $5 billion, Wells Fargo invested $4 billion, Morgan Stanley spent $1.8 billion, and Bank of America shelled out $7.2 billion, the most in four years.
