What’s Behind Wall Street’s Bumper Year

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Alex Ossola (0:33)

Why politicians have stopped talking about a climate crisis. Plus, what's driving one of Wall Street's best years ever?

David Benoit (0:40)

People are turning to their banks saying, hey, help me trade, help me borrow more money to trade. All that leads to record markets revenue.

Alex Ossola (0:47)

And President Trump says he's still deciding between two Kevins to lead the Federal Reserve next year. It's Friday, December 12th. I'm Alex Ossola for The Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today.

Major US stock indexes fell today. The NASDAQ led the losses, dropping 1.7% after it was dragged down by Broadcom's stock. The chip maker dropped more than 11% and suffered its largest one-day market cap loss on record, losing $219 billion, according to Dow Jones Market Data, after its latest earnings report. The company posted a record $18 billion in sales but raised questions about its sales forecasts and margins. Chief Executive Hock Tan said Broadcom's fast-growing AI business has lower gross margins than other areas, while its forecast for non-AI revenue for the current quarter was flat. The Dow dropped half a percent and the S&P 500 lost 1.1%. Meanwhile, Bank of America notched a symbolic win today when its share price finally recovered from the 2008 financial crisis, closing at its first record high since November 2006 The shares are now up 25% this year and closed up 1.1% today at $55.14 a share. Bank of America isn't the only big bank having a great year. This year is wrapping up as one of the best years ever for Wall Street, based on comments from bank leaders at a Goldman Sachs conference this week. For more on what's driving this, I'm joined by our Wall Street editor, David Benoit. David, a couple stats from today's story. Goldman Sachs CFO said it looked like the bank's second biggest year in history for banking fees. On the market side, JPMorgan's head of consumer banking was forecasting growth in the low teens from a year ago for trading revenues. What made this such a hot year in investment banking and trading for these big banks?

David Benoit (2:47)

I think you can basically say chaos works out pretty well for the banks on the investment banking fees that Goldman is talking about. This is going to wind up pretty much the second best year outside of 2021 for all M&A across the globe. We've seen really big deals. We saw the buyout of Electronic Arts, the video game maker. We saw Google buy Whiz, a security company. We've got the ongoing fun of Warner buyout from Netflix or whoever. The banks love those things. That's where they get their fees. And companies really jumped on. Donald Trump is going to approve deals. This is our chance to strike. On the market side, again, I think you can pretty well point to the White House here. You look back in April and we had a lot of turmoil on the markets because of Liberation Day. That's smoothed out, but we've had lots of questions about where the economy is going, questions about what the Fed is up to. All that stuff leads to people trading stocks. And stocks are at all time highs. We're closing in on Dow 50,000. People are turning to their banks saying, hey, help me trade, help me borrow more money to trade. All that leads to record markets revenue.

Alex Ossola (3:51)

How are these banks approaching getting new business in 2026 and how is that changing?

David Benoit (3:56)

So everyone is pretty cutthroat right now, right? They see all these fees out there and they're all trying to get them. We are seeing a lot of banks talk about we're ready to spend, we're ready to grow, we want to grow faster, which is kind of a different tone than we've heard for the last few years where it's sort of been like, we're doing okay, don't worry about us. I think the big sign from this conference was JPMorgan announced they're going to spend $105 billion in expenses next year, which is up like $10 billion from this year and like up $30-something billion from just a few years ago. This is money on AI, this is money on talent, this is money on just like putting it to more customer use. So this is pretty big stuff. We're ready to see a big year for banking in 2026 Again, depends on what happens in geopolitics and the rest of the world, but that's how they're feeling going into 2026 on the back of this big year.