Wall Street Trading Bonanza Rolls On After Firms Notch Records

(Bloomberg) — Wall Street’s biggest stock traders just delivered their best quarter ever. And that was before President Donald Trump’s trade war made stock and bond markets even wilder. 

Goldman Sachs Group Inc. became the latest firm to report its highest-ever quarter for equity trading, after JPMorgan Chase & Co. and Morgan Stanley hit similar milestones last week amid volatility triggered when Trump took office with a raft of audacious policies. The banks’ top executives see it continuing, at least for now, as markets remain on edge over the extent and impact of the tariff onslaught announced by the President earlier this month. 

“The first quarter flows into the second quarter,” Morgan Stanley Chief Executive Officer Ted Pick said after his bank announced earnings. “There is a lot of client interaction and the animal spirits are still there insofar as folks are trying to not get caught offside.”

As markets whipsawed on Trump’s plan to impose the steepest US tariffs in over a century and then his swift about-face, JPMorgan notched some of its highest-volume trading days ever in the first weeks of April, according to a person familiar with the matter. At Bank of America Corp., trading activity also soared in that period, clocking in at 50% higher than the prior year at certain points, another person said, asking not to be identified discussing private information.

The intense market swings create the opportunity to make profit but traders also run the risks of higher losses. In market parlance, periods when investors capitalize on volatility is called ‘good volatility’ while it’s deemed ‘bad’ if they sit it out, potentially crippling liquidity. The massive volatility has strained stock markets and driven up yields on US Treasury bonds, triggering debate about their safe-haven status and whether the Federal Reserve may intervene to stem the losses.

“Are there still forms of volatility that can be bad for the markets franchise? The answer to that question is definitely yes,” JPMorgan Chief Financial Officer Jeremy Barnum said last week. “People make fun of the kind of good volatility, bad volatility story, but we like it or not, it’s real.”

His bank boosted equities markets revenue 48% to $3.81 billion in the first three months of the year, surging past analysts’ expectations as well as the firm’s previous stock-trading record set four years ago. Morgan Stanley’s stock traders earned a record $4.13 billion in the period, up 45% from a year ago. On Monday, Goldman said equity-trading revenue rose to a record $4.19 billion. 

“There were things going on before April 2nd that were shifting perspectives that also led to more activity,” Goldman’s CEO David Solomon said on an earnings call. While it’s still early in the second quarter, the bank’s trading business is performing well, he added. 

“I know there is a higher level of uncertainty, but at the same point, clients are active, people are shifting positions and we still see significant activity levels,” Solomon said.

Some of the largest US market-making firms are also seeing the benefit of heightened volatility. Citadel Securities and Virtu Financial Inc., both experienced record days of trading volume in April, according to people familiar with the matter. 

The industry has also been able to handle the volume levels without “any notable interruptions,” Virtu’s CEO Doug Cifu said in an emailed statement.

“This accomplishment is a reflection of the lessons learned from prior market events and highlights how competition helps markets by driving firms to innovate and invest in their systems,” he said.

The exchange venues where stocks, options and futures all trade also saw records. CME Group Inc., the largest US derivatives platform, said three of its top five volume days on record occurred in the first two weeks of April. Cboe Global Markets Inc. said eight out of 10 volume records for options on SPX were set in 2025 already.

The chaotic rollout of Trump’s tariff policy is likely to keep volatility elevated. On Friday, the administration announced a set of exemptions for popular consumer electronics from the steep tariffs on China. By Sunday, Trump had downplayed the reprieve as a procedural step. 

The uncertainty can have a chilling effect elsewhere, with consequences that are hard to predict. As JPMorgan CEO Jamie Dimon noted last week, lower volumes of bond deals may lead to lower trading “so it will have lower volumes in certain markets,” he said. “And how it all filters through is almost impossible to tell.”

–With assistance from Keith Gerstein and Hannah Levitt.

stories like this are available on bloomberg.com