Ducks are the first to know when the river warms in spring! Wall Street issues a warning: the "trading frenzy" is losing momentum.

Executives at major Wall Street banks have collectively issued a warning: the trading frenzy that drove record second-quarter profits is cooling down, and the high growth momentum in market operations is unsustainable.

This week, executives from major U.S. banks successively lowered their forward guidance at an industry conference. Bank of America CEO Brian Moynihan was the first to state that he expected the bank's sales and trading revenue to be "flat" in the third quarter. Following this announcement, Bank of America's stock price plummeted 5% that day, dragging down the stock prices of its peers. While JPMorgan Chase and Citigroup gave relatively optimistic forecasts, their growth rates had clearly slowed compared to the explosive growth in the second quarter.

This series of statements marks a turning point in the boom cycle of Wall Street's trading business, and investors who bet on bank stocks to continue to benefit from market volatility need to reassess their positions.

Second Quarter: An "Exceptionally Good" Quarter

In the second quarter of this year, Wall Street trading achieved a historic high. The combined equity trading revenue of JPMorgan Chase, Goldman Sachs, Citigroup, and Bank of America surged 72% year-on-year to $19.3 billion.

Behind this feast is the resonance of multiple factors: investors' fervent pursuit of artificial intelligence-related stocks, the speculative wave in the Asian semiconductor sector, and the violent stock market fluctuations brought about by SpaceX's mega-IPO, all of which have jointly generated unprecedented trading activity.

Morgan Stanley co-president Daniel Simkowitz bluntly stated, "The market performance in the second quarter of this year was quite outstanding, and it's safe to say that the third quarter will not be a repeat of the second."

Third quarter: Growth rates diverged, but generally slowed down.

Despite differing outlooks for the third quarter, a slowdown in growth is a consensus.

JPMorgan co-president Doug Petno expects a "seasonal sequential decline" in markets revenue after a record quarter, but the bank still guides third-quarter trading revenue to grow by "more than ten percentage points" year-over-year. Citigroup, on the other hand, predicts its markets division will achieve mid-single-digit percentage growth.

In contrast, Bank of America's "flat" forecast is the most conservative. Brian Moynihan points out that Asian financing activity has cooled significantly, with a marked decline in the region's prime brokerage business—that is, lending services provided to hedge funds, trading firms, and family offices.

Goldman Sachs CEO David Solomon stated that the bank's equity business "remains very strong," but revenue from fixed income, currencies, and commodities will "soften slightly." Goldman Sachs' stock price has fallen by approximately 7% over the past week.

Structural demand remains, and the long-term logic remains unchanged.

Despite pressure on short-term growth, Wall Street executives generally emphasize that the long-term structural opportunities in market operations have not faded.

JPMorgan's Petno highlighted the "significant increase" in demand for prime brokerage and structured financing, and believes this trend "will continue for quite some time."

Goldman Sachs' Solomon offered a more macro-level perspective on the market outlook: "If you believe that the market capitalization in the US and globally will grow at a certain rate over the next decade, then the space we provide for financing to our clients will also grow at a corresponding rate." He also acknowledged that growth will not be a straight line.

Wall Street banks will release their third-quarter earnings reports next month, ending in September, at which time the actual performance of their trading businesses will be put to the test.

Risk warning and disclaimerInvesting involves risk; please exercise caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Any investment decisions made based on this information are at your own risk.