JPMorgan Chase, Morgan Stanley And Wells Fargo Face Earnings Uncertainty Amid Trump Tariff Fallout And Market Turmoil

U.S. investment banks are set to announce their earnings in an economic climate marred by turbulence and the repercussions of President Donald Trump‘s tariffs, which have led to a substantial decline in U.S. stocks.

What Happened: Banks such as JPMorgan Chase & Co. JPM, Wells Fargo & Co. WFC, and Morgan Stanley MS have experienced a significant drop in their share prices over the past week. The expected prosperous year for investment banks is currently on hold due to economic instability and the effects of Trump’s tariffs, KBW equity research analyst, David Konrad, said, reported Fortune.

Konrad has revised his Q1 estimates for most globally systemically important banks (G-SIBS), predicting a 5% quarter-over-quarter drop in investment banking. Mike Mayo, Wells Fargo’s head of large bank research, also revised his Q1 estimates for bank stocks, reducing them by 4%.

"Although we expect a solid quarter compared to the first quarter 2024, volatility in interest rates, sticky inflation and uncertainty surrounding tariffs drove declining equity markets and muted lending and investment banking activity for the quarter," wrote Konrad.

Mayo anticipates that JPMorgan Chase, the country’s largest bank, will exceed Q1 expectations. While Mayo raised JPMorgan Q1 EPS estimate by 12 cents to $4.77 a share, Konrad lowered his estimate by one cent to $4.65.

Both Mayo and Konrad have lowered their Q1 EPS estimates for Morgan Stanley, while Wells Fargo is also due to report on Friday. For Wells Fargo, Konrad boosted his estimate by one cent to $1.22 a share.

Why It Matters: The current economic uncertainty and the impact of Trump’s tariffs have led to a significant drop in bank stocks. This has resulted in analysts revising their forecasts for Q1 earnings. For instance, Wells Fargo is expected to report Q1 earnings at $1.23 per share, up from $1.20 per share in the year-ago period. However, the bank’s projected quarterly revenue of $20.76 billion is slightly lower than the $20.86 billion reported a year earlier.

Goldman Sachs Group Inc. GS, Citigroup Inc. C and Bank of America Corp. BAC are set to announce their Q1 results next week. Despite Citi’s stock falling nearly 13% since April 2, when President Trump unveiled his “Liberation Day” tariffs, Mayo still favors the bank.

Bank of America is scheduled to announce results on Tuesday, April 15. Mayo has trimmed his Q1 EPS forecast by two cents to 78 cents, while Konrad has cut his estimate by five cents to 84 cents.

Shares of JPMorgan Chase dropped 3.09% on Thursday, while Wells Fargo and Morgan Stanley stocks declined 4.85% and 4.58%, respectively, according to data from Benzinga Pro.