Why It Matters

Given its dimension, JPMorgan specifically is a proxy for the banking trade. Jamie Dimon, the financial institution’s chief government, has deep political connections, and his prognostications on the economic system are scrutinized in some circles as intently as a central banker’s musings.

On Friday, Mr. Dimon informed analysts that he anticipated the U.S. economic system to expertise “a soft landing, mild recession or a hard recession,” although he didn’t put a time-frame on the prediction. “Obviously, we shall hope for the best,” he mentioned.

In its newest report, the financial institution listed a litany of dangers, together with that buyers are burning by means of their money buffers and that inflation stays excessive. Last quarter, JPMorgan misplaced $900 million on investments in U.S. Treasury bonds and mortgage-backed securities, which have dropped in worth as charges have risen — however that was barely a dent in its outcomes.

Wells Fargo, one of many nation’s largest mortgage lenders, is watched by analysts for indicators of financial stress. The U.S. economic system “continues to perform better than many had expected,” mentioned Charles W. Scharf, the financial institution’s chief government.

The financial institution mentioned Friday that soured loans in its industrial enterprise had elevated, however that its shopper enterprise had held pretty regular, with a slight rise in credit-card defaults offset by a drop in losses on auto loans. Commercial actual property, particularly loans on workplace area, is a ache level, and the financial institution put aside practically $1 billion extra for losses.

Unlike the opposite banks, Citigroup reported a fall in second-quarter revenue, though the decline was not as extreme as analysts had predicted. “The long-awaited rebound in investment banking has yet to materialize, making for a disappointing quarter,” Citi’s chief government, Jane Fraser, mentioned in an announcement.

Background

The three main banks that reported earnings Friday have been all over the news this yr, due to their outstanding function making an attempt to be a stabilizing drive throughout the spring banking disaster that felled three smaller lenders. JPMorgan bought a kind of failed banks, First Republic. In a sign of how troubled that establishment had turn out to be, JPMorgan mentioned Friday that it was setting apart $1.2 billion to cope with losses in First Republic’s lending portfolio.

Analysts nonetheless count on the acquisition to show worthy ultimately, due to First Republic’s base of rich purchasers and coastal branches, which Friday’s outcomes present are already buoying JPMorgan’s asset and wealth administration arms.

The U.S. authorities debt-limit standoff in April and May was additionally mirrored within the banks’ outcomes, with Citi citing anxiousness throughout the negotiations as pushing investment-banking purchasers to the “sidelines” throughout the second quarter.

What’s Next

In the subsequent week or so, a slew of different banks will report quarterly earnings. Among essentially the most intently watched can be Wednesday’s outcomes from Goldman Sachs, which has hinted publicly of a disappointing stretch, and regional banks like Western Alliance and Comerica, which can be seeking to show they’ve bounced again from their current troubles.