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Dismal Trading Performance to Hurt JPMorgan (JPM) Q2 Earnings

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Unlike the previous five quarters, JPMorgan’s (JPM - Free Report) trading revenues (constituting roughly 20% of its total revenues) are not expected to have improved significantly in second-quarter 2021. Since the coronavirus outbreak in mid-March 2020, client activities were remarkable and the markets witnessed unexpected volatility, which aided trading performance. However, because of market normalization and reduced volatility in the second quarter, JPMorgan’s trading business is expected to have been hurt, which is expected to dampen overall results, scheduled to be announced on Jul 13, before market open.

Similar to the past few quarters, all major indexes — the S&P 500, Dow Jones and Nasdaq — witnessed an upswing in the second quarter and touched new highs. However, because of relatively low volatility in the to-be-reported quarter, equity volumes are likely to have been impacted. Thus, JPMorgan’s equity markets revenue is not expected to have improved much in the quarter.

Nevertheless, the Federal Reserve’s bond-buying program is likely to have offered some support to fixed-income trading volumes. Hence, the bank’s fixed income markets revenue is likely to have been decent.

At an investor conference in mid-June, JPMorgan signaled an end to the pandemic-era trading boom. The company’s CEO Jamie Dimon projected a 38% year-over-year plunge in trading revenues. He stated that the quarter under review will be “more normal” for trading business, with revenues coming in at “something a little bit north of $6 billion, which is still pretty good, by the way.”

Earnings & Revenue Expectations

For JPMorgan, the Zacks Consensus Estimate for second-quarter 2021 earnings is pegged at $3.05, which indicates a significant rise from the prior-year quarter’s reported number. However, the consensus estimate for sales of $29.98 billion suggests a year-over-year decline of 9.1%.

JPMorgan Chase & Co. Price and EPS Surprise


JPMorgan Chase & Co. Price and EPS Surprise

JPMorgan Chase & Co. price-eps-surprise | JPMorgan Chase & Co. Quote

See what other factors are expected to have influenced JPMorgan’s overall performance in the to-be-reported quarter.

Our Take

Continued near-zero interest rates along with muted loan growth are expected to have hurt this Zacks Rank #3 (Hold) stock’s interest income to an extent in the to-be-reported quarter. Also, dismal trading performance along with not-so-impressive performance of the mortgage business (despite low mortgage rates) is expected to have negatively impacted the top line.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Trading Revenue Expectations of Other Players

Trading revenues constitute a major portion of total revenues for Bank of America (BAC - Free Report) , Citigroup (C - Free Report) and Morgan Stanley (MS - Free Report) . Similar to JPMorgan, dismal trading performance is likely to have adversely impacted these banks’ revenues and earnings in the second quarter.

In-Depth Zacks Research for the Tickers Above

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Bank of America Corporation (BAC) - free report >>

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Citigroup Inc. (C) - free report >>

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