A Stellar Start: Big Banks Defy Credit Fears to Kick Off Q2 Earnings

by Christine Short of Wall Street Horizon, 7/21/26

Key Takeaways

  • All eyes turn to the first two Magnificent 7 earnings reports this week: Alphabet and Tesla, as well as IBM results

  • The latest LERI reading shows corporations are feeling confident with growth prospects as we head into the back half of the year

  • Potential earnings surprises this week: Charles Schwab, AvalonBay Communities, Norfolk Southern and more

Big Banks Ignite Q2​

The second-quarter earnings season kicked off last week with a resounding statement from Wall Street, led by stellar results across the nation's six largest banking institutions. Leading better-than-expected bottom-line results was the massive spike in investment banking fees and equity trading revenues. After a prolonged and quiet period in corporate dealmaking, the floodgates have officially reopened with corporate debt issuance, secondary offerings, and IPOs completely reigniting capital markets.

Goldman Sachs1, Bank of America2, and JPMorgan Chase3 led the charge, capitalizing on a sharp revival in corporate debt issuance and secondary offerings alongside blockbuster quarters for their trading desks. This momentum carried over to Citigroup4, which benefited heavily from major debt and equity underwriting on high-profile public debuts like SpaceX and Cerebras, and Morgan Stanley5, which comfortably beat expectations across both revenue and earnings. Collectively, these results signal a powerful reopening of the global capital markets after a prolonged period of muted dealmaking.

Heading into the quarter, investors braced for a wave of credit deterioration that never broke, as widely feared spikes in loan loss provisions failed to materialize. Instead, credit quality remained remarkably resilient, with both Citigroup and Bank of America actually lowering their provisions for credit losses. Consumer credit also showed strength, as JPMorgan Chase beat expectations by lowering its credit card net charge-offs and full-year outlook. However, this recovery carried a minor caveat: JPMorgan reported that revolving credit card balances crept higher, signaling that while defaults remain low, some consumers are carrying more month-to-month debt to navigate persistent inflation.

Underpinning these financial results was a chorus of optimistic commentary from Wall Street's C-suite, painting a picture of an economy that remains surprisingly robust. JPMorgan Chase CEO Jamie Dimon highlighted the "notable resiliency" of the U.S. economy, pointing to a strong labor market and fiscal stimulus as key drivers keeping business investment active and the broader markets booming. CFOs echoed this confidence regarding consumer health; Citigroup CFO Gonzalo Luchetti noted that the U.S. consumer remains highly resilient, with card performance and delinquencies tracking in line with or better than expectations. However, this optimism was met with a note of caution from the retail-heavy perspective of Wells Fargo. While acknowledging that consumer credit remains fundamentally strong, CFO Mike Santomassimo warned that persistent inflation and elevated everyday expenses could eventually squeeze household budgets and dampen future spending.6

With those bank reports, and results from 25 other S&P 500 constituents, the blended EPS growth rate moved higher to 24.7% last week, from 23.6% the week prior. Revenue growth also saw a bump to 12.8% from 12.3% in the week prior.7

See more: Q2 2026 Equity Markets