Quarterly results from the largest U.S. banks drew a cool reception, but stock-trading floors largely held up. Choppier global markets and a surge in prime brokerage activity serving hedge funds were tailwinds, with brisk stock action and demand from leveraged funds adding fuel.
Goldman Sachs, JPMorgan Chase and Morgan Stanley topped expectations in equities trading, while Citigroup and Bank of America missed on that line. The broader takeaway stayed the same: results were a mixed bag, and investors were not impressed.
Average share volume on U.S. exchanges is running 7.5% higher this year, according to Bloomberg Intelligence. On a dollar basis, 2026's trading value is up 27% to date, coming after advances of 36% during 2025 and 18% during 2024. "Volumes have been going through the roof," said Larry Tabb, BI's market structure research chief.
Tabb pointed to the first six months of 2026 as especially heavy, citing positioning around the Iran war, AI-linked trades, a bearish tilt in software, SpaceX's IPO, and market reactions when President Trump "says this or that, that causes people to react." Banks still command a big piece of institutional flow and excel at research, conferences and connecting clients with senior corporate leaders.
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Competition for retail order flow is real. When SpaceX debuted in June, Charles Schwab recorded one of the busiest sessions in its 55-year history, as individual investors piled in. And the World Cup helped push prediction platforms Kalshi and Polymarket to record volumes in July, with attention now turning to how upcoming U.S. midterm elections could shape activity.
Even with equity desks humming, the sector faces two big question marks: how artificial intelligence will reshape financial services and how forcefully the Federal Reserve will fight sticky inflation. Volatility gauges suggest limited stress in stocks right now, yet the ongoing conflict in the Middle East continues to churn portfolios, aiding trading activity.
Mike Mayo at Wells Fargo flagged a "multi-year divergence of equities versus fixed income," adding that this year could be the first since 2008 when equity trading tops fixed income.
For now, equity trading is a profit center, but the bank trade remains out of favor. The KBW Bank Index has slipped about 1.2% this week and is set for a sixth consecutive down week, a drought not seen since 2008. Sustainability is the watchword: if higher rates bite and deal-making stalls, today's trading strength may not offset softness elsewhere.
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