Profits at Goldman Sachs (GS) surged in the second quarter as the Wall Street giant benefited from a boost in trading and dealmaking, the latest example of how big banks were able to recover from the market chaos triggered by President Trump’s tariffs.
“The economy and markets are generally responding positively to the evolving policy environment,” Goldman CEO David Solomon said in a statement. “But as developments rarely unfold in a straight line, we remain very focused on risk management.”
Earnings jumped 22% from the year ago quarter, to $3.7 billion, surpassing analyst forecasts. Investment banking fees jumped 26% due largely to advising companies on mergers.
Trading revenue also surged as the volatility triggered by Trump’s tariffs turned out to be a boost for Wall Street trading desks. Equities trading climbed 36%, marking the best stock-trading quarter in the company’s history.
Two Goldman rivals JPMorgan Chase (JPM) and Citigroup (C) also posted higher dealmaking and trading revenue on Tuesday.
Higher trading provided additional boosts to Morgan Stanley (MS) and Bank of America (BAC), which reported their earnings Wednesday, but investment banking revenue was down slightly for those banks from a year ago. Overall net profits for both banks were up.
“April was just really slow,” Bank of America CFO Alastair Borthwick told reporters during a Wednesday morning call. “Our M&A business did fine in terms of the number of deals this quarter, but the deals that we closed were just smaller.”
Three months ago, a sense of gloom hovered over the first quarter earnings season as bankers grappled with a halt in dealmaking and the market chaos that followed Trump’s April 2 “Liberation Day” tariff announcement, with some warning of “considerable turbulence” and a possible recession.
That gloom has been replaced by measured optimism among most bankers. Some red-hot IPOs and sizable mergers have helped, as have several developments in Washington, D.C., while the Trump administration begins to loosen capital and supervisory rules for big banks.
JPMorgan CEO Jamie Dimon on Tuesday said investment banking activity “started slow but gained momentum as market sentiment improved” and “the U.S. economy remained resilient in the quarter.”
“I don’t think any of us expected that we’d end up where we are at the end of the second quarter,” Citigroup CFO Mark Mason admitted the same day in a call with reporters.
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance. His email is david.hollerith@yahoofinance.com.
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