Executive Summary
As America’s banking giants prepare to unveil their second-quarter 2025 results next week, investors face a critical juncture. After a stellar year-to-date performance that has seen major banks outpace the broader market with an average 18% gain, the pivotal question emerges: Has the easy money already been made?
JPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Company (NYSE: WFC) will kick off the earnings parade on Tuesday, July 15, followed by Bank of America Corporation (NYSE: BAC) on Wednesday, July 16. These reports arrive at a particularly uncertain moment, with the Federal Reserve maintaining its wait-and-see approach on interest rates amid tariff-induced economic turbulence.
The Stakes Have Never Been Higher
The banking sector enters this earnings season from a position of strength, yet faces mounting headwinds. While structural tailwinds remain strong, especially for names like Citigroup Inc. and Wells Fargo & Co., the absence of fresh catalysts in the second half could slow the pace of gains unless earnings surprises deliver.
Three critical factors will shape investor sentiment:
- Interest rate trajectory: The Fed’s steadfast position at 4.25%-4.50%
- Net interest income resilience: Banks’ ability to maintain margins
- Trading revenue sustainability: Whether the equity trading boom continues
JPMorgan Chase: The Bellwether Under Pressure
What to Expect
JPMorgan is expected to post earnings per share of $4.48 for the second quarter, slightly above consensus. The nation’s largest bank by assets faces heightened scrutiny after its impressive 19.86% year-to-date rally.
Key metrics to watch:
- Net Interest Income: Expected at $11.96 billion, up 3.4% quarter over quarter, with FY25 guidance revised higher to $95.2 billion
- Trading Revenue: Analysts anticipate continued strength, particularly in equities
- Credit Quality: Provision levels will signal management’s economic outlook
The Dimon Factor
CFO Jeremy Barnum said 2025 net interest income might “end up a little better, maybe by $1 billion,” reflecting fewer expected Fed cuts. However, CEO Jamie Dimon’s commentary on tariffs, recession risks, and geopolitical tensions will likely overshadow the numbers themselves.
The Challenge Ahead
With JPMorgan stock already up sharply by 19% year to date, the market is wondering if the near-term upside is limited. The bank must deliver not just solid results, but also compelling forward guidance to justify its premium valuation.
Bank of America: The Laggard Seeking Redemption
Earnings Preview
Analysts expect the Charlotte, North Carolina-based company to report quarterly earnings at 87 cents per share, up from 83 cents per share in the year-ago period. Despite being the relative underperformer with only a 7.83% year-to-date gain, Bank of America may have the most room to surprise.
Key Focus Areas
- Consumer Banking Health: With Brian Moynihan emphasizing consumer resilience, credit card and mortgage trends will be crucial
- Wealth Management: Performance in this high-margin business could differentiate BAC
- Operating Efficiency: Cost control measures amid revenue pressures
The Moynihan Message
“Our business clients have been performing well; and consumers have shown resilience, continuing to spend and maintaining healthy credit quality,” Bank of America CEO Brian Moynihan said, adding that Bank of America is well-positioned to continue growing even “though we potentially face a changing economy in the future.”
Wells Fargo: Liberation Day
The Asset Cap Era Ends
Wells Fargo & Co. is entering its first full quarter without the Fed-imposed asset cap. This regulatory milestone positions the bank for potential growth acceleration.
Earnings Expectations
- EPS Forecast: Second-quarter EPS is estimated at $1.42
- Net Interest Income: Full-year net interest income projected at $48.5 billion, representing 1.1% year-over-year growth
Strategic Positioning
CEO Charlie Scharf’s restructuring efforts face their first real test in an unconstrained environment. “Timely resolution which benefits the U.S. would be good for businesses, consumers, and the markets. We expect continued volatility and uncertainty and are prepared for a slower economic environment in 2025,” Scharf said in a statement.
The Macro Environment: Storm Clouds Gathering
Federal Reserve Stance
The Federal Reserve on Wednesday kept interest rates steady amid expectations of higher inflation and lower economic growth ahead, and still pointed to two reductions later this year. This cautious approach reflects the complex economic crosscurrents banks must navigate.
Interest Rate Implications
The Fed’s position creates a mixed blessing for banks:
- Positive: Higher rates support net interest margins
- Negative: Dampens loan demand and increases credit risks
- Uncertainty: Tariff-driven inflation complicates the outlook
Economic Indicators
The Fed raised its core inflation projections for 2025 to 2.8% from 2.5%. This shift partially reflects the expected impact of recently implemented U.S. tariffs and consequential retaliation.
Trading Revenues: The Bright Spot
Equity Trading Boom
First-quarter results showed exceptional trading performance:
- JPMorgan’s equities trading revenue surged 48% to $3.8 billion
- Investment banking fees showed signs of recovery
Sustainability Questions
Morgan Stanley and Goldman Sachs face tougher comps. The key question: Can volatile markets continue providing trading opportunities, or will uncertainty freeze activity?
Credit Quality: The Looming Concern
Current State
Banks have maintained strong credit metrics, but forward-looking indicators bear watching:
- Commercial real estate exposure
- Consumer credit card delinquencies
- Corporate loan refinancing needs
Provision Outlook
Expect conservative guidance as management teams balance:
- Current economic strength
- Tariff-induced uncertainty
- Potential recession risks
Investment Banking: Waiting for the Revival
M&A Drought Continues
Though M&A was expected to roar back in 2025 thanks to the new administration, uncertainty around Washington policy appears to be holding back new deals.
IPO Pipeline
Capital markets activity remains subdued, pressuring fee income across the industry. Banks need clarity on trade policies before corporate clients commit to major transactions.
The Earnings Call Playbook
Critical Questions for Management
For JPMorgan:
- How is the bank positioned for potential Fed cuts in H2 2025?
- What’s the outlook for investment banking given policy uncertainty?
- Are credit cards showing any stress signals?
For Bank of America:
- Can the consumer banking franchise maintain momentum?
- What’s driving the wealth management strategy?
- How is the bank managing deposit costs?
For Wells Fargo:
- Post-asset cap growth priorities?
- Commercial lending pipeline strength?
- Efficiency ratio improvement trajectory?
Sector Outlook: Navigating Uncharted Waters
Near-Term Challenges
The S&P 500 is anticipated to experience a slowdown in earnings growth for the second quarter (Q2) of 2025, with projections indicating a year-over-year (YoY) earnings growth rate of approximately 4.9% to 5.7%, a notable deceleration from the 11.9% growth recorded in Q1 2025.
Longer-Term Opportunities
Despite headwinds, structural positives remain:
- Digital transformation investments paying off
- Market share consolidation among major players
- Potential for regulatory relief under new administration
Technical Analysis: Key Levels to Watch
JPMorgan Chase
- Support: $265-270 range
- Resistance: $285-290 zone
- Key indicator: 50-day moving average at $274
Bank of America
- Support: $44-45 area
- Resistance: $48-50 region
- Relative strength improving
Wells Fargo
- Support: $68-70 level
- Resistance: $75-77 band
- Momentum indicators bullish
The Verdict: Cautious Optimism Warranted
As the banking titans prepare to report, investors should brace for a reality check. The sector’s remarkable run has created high expectations that may be difficult to exceed. Bank of America analyst Ebrahim H. Poonawala said this earnings season may represent a “breather” for the group.
Key Takeaways for Investors
- Temper Expectations: With significant gains already banked, upside surprises are needed to fuel further rallies
- Focus on Guidance: Forward-looking commentary matters more than backward-looking results
- Differentiation Matters: Stock picking within the sector becomes crucial as uniform outperformance unlikely
- Risk Management: Consider taking some profits after the strong run
The Bottom Line
Q2 2025 bank earnings represent a critical inflection point. While fundamentals remain solid, the easy money from the Fed pivot trade and Trump election euphoria has likely been made. Success from here requires execution excellence and nimble navigation of an increasingly complex operating environment.
For investors, the message is clear: The banking bull run isn’t over, but it’s entering a more challenging phase where alpha generation requires deeper analysis and selective positioning. As these financial giants reveal their cards next week, the market will deliver its verdict on whether the sector can sustain its momentum or if it’s time for a well-deserved breather.
Earnings season begins Tuesday, July 15, with JPMorgan Chase and Wells Fargo reporting before market open, followed by Bank of America on Wednesday, July 16.
Terry brings over 25 years of experience in stock and options trading, having actively navigated markets since 1999. A seasoned trader who has weathered multiple market cycles—from the dot-com boom and bust through the 2008 financial crisis to today’s dynamic markets—he combines deep market knowledge with technical expertise.
As a developer and digital creator, Terry has built and launched multiple financial websites and trading tools, bridging the gap between complex market analysis and accessible financial information. His unique perspective comes from hands-on experience on both sides of the screen: as an active trader executing strategies and as a developer creating platforms that serve the trading community.
Terry’s coverage focuses on actionable market analysis, options strategies, and technical insights drawn from real-world trading experience. He specializes in identifying market trends, analyzing options flows, and translating complex market movements into clear, practical insights for traders at all levels.
When not analyzing markets or developing new tools, Terry continues to actively trade and test strategies, ensuring their analysis remains grounded in current market realities.