Working from home hasn’t slowed down Wall Street’s trading desks.

The five biggest U.S. investment banks are on pace for their first $100 billion year for trading revenue in more than a decade. In just three quarters, they’ve already generated almost $84 billion, more than any full year since 2010.

Sell-side traders have ridden a wave of activity as markets plunged at the start of pandemic-spurred lockdowns before embarking on dramatic rebounds. Trading gains since the start of the pandemic have helped offset weakness in consumer businesses at the nation’s biggest banks, where loan-loss provisions piled up in the first half of the year.

Capital markets units have “really been the bright spot as far as revenues have gone since the pandemic started,” Jeff Harte, a bank analyst at Piper Sandler, said in a Bloomberg Television interview. “It’s been pretty good earnings, at least from the big banks.”

Trading Surge
JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley all saw trading revenue surge more than 20% for a third straight quarter. The totals weren’t as staggering as the second quarter, which was a record for modern Wall Street’s trading and dealmaking units, but they helped lift Goldman to record per-share earnings and Morgan Stanley to its second-highest profit ever.

The windfall for investment banks as the broader economy suffers has raised questions about the Federal Reserve’s policy response and lenders’ role in a recovery. It also raises challenges for how the firms handle paying the traders who’ve brought in the haul. But the gains have ultimately kept profit relatively stable and helped banks avoid the existential questions they faced in the last crisis.

With results in from the six biggest U.S. banks, here’s a look at some of the other key takeaways as Wall Street heads toward finishing a turbulent year:

Stocks Shunned
While the firms’ collective profit rebounded almost back to pre-pandemic levels, investors aren’t treating the biggest banks like they’re out of the woods.

Five of the six banks surpassed analysts’ per-share earnings estimates, but only two saw their stocks climb after reporting.

That continues a yearlong trend where financial firms have been largely left out of the market recovery. Shares of the four largest lenders are all down more than 27% this year, even as the broader S&P 500 has surpassed previous highs. The only sector banks are outperforming is energy.

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