Banks' Trading Revenue Burst Comes With a Big Caveat

One of the big winners of the stock market's 2018 market gyrations appears to be Wall Street. While the overall market has increased just more than 1 percent this year, the big banks are up much more. Shares of Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Bank of America Corp. have risen 3 percent, 6 percent, 7 percent and 8 percent, respectively. Citigroup Inc. is the only bank with a large Wall Street presence that is down this year.

Part of what is lifting the stocks of the big banks is the expectation that their trading revenue will rebound this quarter. On Tuesday, Citigroup became the latest bank to indicate as much. CFO John Gerspach said at an investor conference that market volatility could propel the bank's stock-trading business above $1 billion in the first three months of the year -- the first time that has happened since 2015. Last month, JPMorgan's executives told investors at the bank's annual investor day that a spike in volatility was poised to break the slump in its trading business. "Clearly, the year has started well," said Daniel Pinto, the bank's trading chief.