Patchy third-quarter performance across investment banks and trading desks reflected competing forces — geopolitical tension tied to the Iran conflict, persistent inflationary pressure, and unresolved debate over the scale of corporate spending on artificial intelligence infrastructure — leaving both equity and fixed-income markets without a clear common direction.

Quarterly figures from JPMorgan, Citigroup, Goldman Sachs, and Wells Fargo pointed to a cooling of the dealmaking and trading momentum that had driven record earnings through the first half of the year, with bond market weakness and equity price swings — especially toward the end of September — cited by executives as factors that weighed on activity.

Third-quarter dealmaking held up across the board, with the lending pipeline and consumer and commercial activity all pointing to a stable underlying economy, company executives noted. Goldman Sachs chief David Solomon told analysts that the economy had shown sustained resilience in the face of various headwinds and that a technology-driven investment cycle of considerable scale was now underway.

One executive noted that the prevailing oversight conditions appear to be fostering a climate that draws in dealmaking and corporate activity. Prolonged selling pressure across bond markets — pushing yields in multiple countries to their highest points in a generation — has compressed equity valuations and, in doing so, dampened dealmaking activity.

Activity in the IPO space pulled back over several weeks, putting a dent in what had shaped up as a strong year for new listings. JPMorgan attributed a pullback in deal activity and bond-market trading over recent months to price swings and an unsettled economic backdrop, while its chief financial officer, Jeremy Barnum, told reporters that the pipeline of pending transactions remained in good health — noting that when buyer-seller spreads widen during periods of turbulence, transactions tend to be pushed back rather than abandoned outright.

Those who track market activity noted that the IPO window remains open rather than closed, with postponed listings still viable if trading conditions find firmer footing before the year ends. Solomon aligned himself with that view, telling an interviewer that waiting is a matter of preference, not necessity, given that the market for new listings remains in reasonably healthy territory.

Citigroup's Gonzalo Luchetti and Wells Fargo's Mike Santomassimo, both in the chief financial officer role, separately flagged a pullback in investment banking during the third quarter, with Santomassimo telling reporters on a call that the climb in the benchmark 10-year yield had left a mark on deal flow. Brian Mulberry, chief market strategist at Zacks Investment Management, added that elevated borrowing costs and the prospect of additional Federal Reserve rate increases were placing measurable downward pressure on both trading volumes and investment banking activity.

At JPMorgan and Wells Fargo, senior banking officials told analysts that both retail and corporate borrowers had weathered persistent cost pressures and tighter lending conditions without notable deterioration in repayment behaviour. Santomassimo reinforced that picture by pointing out that the available data contained no indicators of broader financial distress among borrowers.

Equity desks at banks posted a period of healthy activity, with customers reshuffling their holdings in response to shifting interest-rate expectations and climbing energy costs. Trading activity at JPMorgan's markets unit posted a 15 per cent year-on-year gain in the third quarter, with the equities desk alone accounting for a 49 per cent jump in turnover.

Third-quarter earnings at Goldman came in above analyst forecasts, with turbulent trading conditions linked to the Middle East conflict pushing equities revenue higher, while the bank's fixed income, currency and commodities division posted a 1 per cent decline against the same period a year earlier.

Trading results for bank stocks diverged after earnings releases, with Wells Fargo and Citigroup slipping while JPMorgan and Goldman Sachs posted gains. That divergence prompted Oppenheimer & Co analyst Chris Kotowski to raise in a research note the question of whether outsized profit performance at those firms and their large-bank counterparts has become overly reliant on equities trading activity, and whether that particular revenue source can sustain its contribution going forward.