The six largest American banks wrapped up their first-quarter 2026 reporting with combined net income of $47.3 billion, delivering a near-uniform message from Wall Street: trading floors thrived on the volatility unleashed by the Iran war and Strait of Hormuz closure, while the broader economic outlook grew cloudier. JPMorgan earned $5.94 per share on $50.54 billion in revenue as fixed-income trading surged 21 percent to $7.08 billion. Citigroup posted its best quarterly revenue in a decade at $24.63 billion. Bank of America earned $1.11 per share — its highest earnings per share in nearly two decades — while Morgan Stanley posted a record equities trading quarter of $5.15 billion and a 29 percent jump in profit. Goldman Sachs led the week with record equities trading revenue of $5.33 billion. The results arrived even as the banks collectively announced roughly 5,000 job cuts, a sign that Wall Street is using the profit windfall to trim headcount rather than expand.
The geopolitical picture deteriorated sharply on April 18 when Iran's Islamic Revolutionary Guard Corps reversed the Foreign Ministry's brief 'open' declaration and re-closed the Strait of Hormuz, with IRGC gunboats firing on at least two vessels that attempted transit. India summoned Iran's ambassador after an Indian-flagged tanker came under fire. The 10-day ceasefire — already fragile since few ships had actually transited despite the April 17 announcement — is expected to expire around Wednesday, April 22; Pakistan is set to host a second round of US-Iran negotiations early the following week. Oil prices, which had partially rebounded toward $96 on April 18, slid again to approximately $86-91 per barrel as the re-closure erased the earlier recovery. On the Federal Reserve front, all 11 Democratic members of the Senate Banking Committee signed a formal letter demanding postponement of Kevin Warsh's April 21 confirmation hearing, calling the Justice Department's criminal investigation into Chair Jerome Powell 'a sham' and part of a White House campaign to seize control of the central bank. Senator Elizabeth Warren separately argued that Warsh's financial disclosures — covering $131 million to $209 million in assets including stakes in SpaceX and Polymarket — violate Senate ethics rules. Committee Chair Tim Scott declined to postpone, but Republican Senator Thom Tillis's unresolved vow to block all Fed nominees means Warsh faces obstacles on both sides of the aisle.
Why it matters
Bank earnings are the economy's first real-time readout on whether the Iran oil shock is bleeding from Wall Street trading floors into Main Street lending and credit.
Oil fell from a $96 partial recovery to approximately $86-91 per barrel after Iran's Revolutionary Guard re-closed the Strait of Hormuz on April 18 and fired on transiting vessels, reversing the brief 'open' declaration of April 17. The US naval blockade remains in force.
Trump concedes Warsh confirmation could fail; Tillis reaffirms block
Policy
President Trump publicly conceded that Senator Thom Tillis's vow to block all Federal Reserve nominees could doom Kevin Warsh's confirmation, calling Tillis someone who 'quit.' Tillis responded 'I'm not dead yet' and reaffirmed he would not vote for any Fed nominee until the Justice Department drops its criminal probe into Jerome Powell over the Fed's $2.5 billion headquarters renovation.
Iran's IRGC re-closes Hormuz, fires on vessels; India summons ambassador
Geopolitical
Iran's Islamic Revolutionary Guard Corps reversed the Foreign Ministry's April 17 'open' declaration, re-closing the Strait of Hormuz and firing on at least two vessels attempting transit. India summoned Iran's ambassador after an Indian-flagged tanker came under fire. Iran called the US naval blockade a 'violation of the ceasefire' and said it was studying fresh US proposals; Pakistan is expected to host a second round of talks early the following week.
All 11 Senate Banking Committee Democrats demand postponement of Warsh hearing
Policy
Every Democratic member of the Senate Banking Committee, led by Senator Mark Warner, signed a formal letter demanding Kevin Warsh's April 21 confirmation hearing be postponed until the Justice Department drops its criminal investigations into Fed Chair Jerome Powell and Governor Lisa Cook — which Warner called 'a sham.' Senator Elizabeth Warren separately argued Warsh's financial disclosures violate Senate ethics rules. Committee Chair Tim Scott declined to postpone.
Paris summit: 40 nations meet to coordinate multilateral Hormuz mission
Geopolitical
France and the United Kingdom hosted roughly 40 countries in Paris to plan a multilateral naval mission to restore freedom of navigation through the Strait of Hormuz. The summit explicitly excluded the United States, whose unilateral blockade of Iranian ports has drawn European criticism. President Macron, Prime Minister Starmer, German Chancellor Merz, and Italian Prime Minister Meloni attended in person.
Iran declares Strait of Hormuz 'completely open'; Trump keeps US blockade
Geopolitical
Iran's Foreign Minister Abbas Araghchi announced the Strait of Hormuz was 'completely open' to all shipping for a 10-day ceasefire period tied to a parallel Israel-Lebanon truce. President Trump immediately countered that the US naval blockade would remain fully in force, leaving the passage in legal limbo with only a handful of ships actually transiting.
Oil crashes more than 10% on Hormuz opening claim
Market
Brent crude plunged 10.7% to $88.73 per barrel — its largest single-day drop in six weeks — after Iran's declaration that the Strait of Hormuz was open. Prices partially recovered to around $96 on April 18 as markets weighed the US blockade's continued enforcement against the ceasefire signal.
Paris summit concludes: 12+ nations commit to Hormuz naval mission; Northwood follow-up set
Geopolitical
The Strait of Hormuz Maritime Freedom of Navigation Initiative summit — co-chaired by President Macron and Prime Minister Starmer with 51 invited nations — concluded with more than a dozen countries committing assets to a strictly defensive, European-led naval mission. A follow-up military planning summit was announced for the UK's Permanent Joint Headquarters in Northwood the following week.
Powell warns of stagflation at Economic Club of Chicago
Policy
Federal Reserve Chair Jerome Powell said tariffs and sustained energy price spikes from the Iran conflict risk driving inflation higher while weakening the labor market — a stagflation scenario that could force rate hikes rather than cuts. The Dow fell 1.6 percent and the Nasdaq dropped 3.1 percent on the remarks.
IEA calls Hormuz closure largest supply disruption in oil market history
Market
The International Energy Agency characterized the Strait of Hormuz closure as the largest supply disruption in the history of the global oil market, as only about 9 vessels per day crossed the strait compared to a prewar average of more than 130.
Bank of America and Morgan Stanley report Q1 2026 earnings
Earnings
Bank of America earned $1.11 per share — its highest EPS in nearly two decades — on $30.43 billion in revenue, with equities trading up 30 percent to $2.83 billion. Morgan Stanley posted a record equities quarter of $5.15 billion and profit of $5.57 billion, up 29 percent, on $20.6 billion in revenue.
Brent crude falls to 3-week low near $97 on ceasefire extension reports
Market
Oil dropped roughly $3 to near $97 per barrel — a three-week low — as reports emerged that Washington and Tehran were exploring extending their ceasefire window to allow more time for negotiations. The Energy Information Administration raised its 2026 Brent price projection to $96 per barrel.
Trump threatens to fire Powell before May 15 term expiration
Policy
President Trump publicly threatened to remove Federal Reserve Chair Jerome Powell if he does not step down when his chairmanship term expires May 15, rattling markets and raising questions about central bank independence ahead of the April 28-29 rate-setting meeting. Powell said he would remain in his role. Legal experts note the Federal Reserve Act limits the president's ability to remove a governor without cause.
Wall Street banks announce 5,000 job cuts despite record profits
Corporate
Even as the six largest US banks reported $47.3 billion in combined first-quarter net income, they collectively announced approximately 5,000 job cuts, using the profit windfall to reduce headcount rather than expand operations.
Senator Tillis vows to block Fed nominees including Warsh until DOJ probe dropped
Policy
Senator Thom Tillis said he would block confirmation of any Federal Reserve nominees — including Kevin Warsh, whose Senate hearing is scheduled for April 21 — until the Department of Justice drops its investigation into the Fed's headquarters renovation, complicating any potential Fed leadership transition.
JPMorgan, Wells Fargo, Citigroup, and BlackRock report Q1 earnings
Earnings
Four major financial institutions reported before the opening bell, kicking off the broadest day of the Q1 2026 earnings season. BlackRock beat estimates with adjusted earnings per share of $12.53 on $6.7 billion in revenue. JPMorgan reported trading revenue up 15 percent.
Goldman Sachs reports record equities trading quarter
Earnings
Goldman Sachs reported earnings per share of $17.55 on $17.23 billion in revenue, with equities trading hitting a record $5.33 billion and investment banking fees up 48 percent to $2.84 billion.
US Navy announces blockade to clear Strait of Hormuz
Geopolitical
President Trump announced the US Navy would blockade the Strait of Hormuz and clear it of mines after Iran continued to charge tolls exceeding $1 million per transiting ship. By mid-April only about 9 vessels per day were crossing the strait, versus a prewar average of more than 130.
Iran ceasefire announced but fragile
Geopolitical
The U.S. and Iran reached a two-week ceasefire, including agreement to reopen the Strait of Hormuz. The S&P 500 posted its best weekly gain since November. Both sides subsequently violated the ceasefire.
Jamie Dimon warns of 'skunk at the party'
Statement
In his annual shareholder letter, JPMorgan's chief executive warned that war-driven inflation could push interest rates higher than markets expect, flagged the $1.8 trillion private credit market as vulnerable, and cautioned about recession risk.
U.S. gasoline prices hit $4 per gallon
Economic
Average gasoline prices surged 30 percent from pre-conflict levels as the Hormuz closure disrupted global energy supply chains.
Federal Reserve holds rates steady
Policy
The Federal Open Market Committee maintained the federal funds rate at 3.5 to 3.75 percent, with projections narrowing to one cut in 2026 as the oil shock threatened to reignite inflation.
Brent crude surpasses $100 per barrel
Market
Oil prices crossed $100 for the first time in four years, eventually reaching $126 at their peak, as the Hormuz closure removed a fifth of global supply from the market.
Iran closes the Strait of Hormuz
Geopolitical
Iran's Islamic Revolutionary Guard Corps blocked the strait, disrupting 20 percent of global oil supply. Tanker traffic dropped to near zero, and the KBW Bank Index plunged 13 percent.
U.S. and Israel launch airstrikes on Iran
Geopolitical
President Trump authorized Operation Epic Fury, with nearly 900 strikes in 12 hours targeting Iranian military facilities, nuclear sites, and leadership. Supreme Leader Ali Khamenei was killed.
Scenarios
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1
Banks ride volatility to a banner year as ceasefire holds
If the Iran ceasefire solidifies and oil prices retreat toward $80, trading desks keep elevated revenue from lingering volatility while investment banking pipelines — already up 48 percent at Goldman — fully reopen. Net interest income stays robust at current Fed rates. Bank stocks recover their March losses and the KBW index returns to pre-conflict levels. This scenario requires the Strait of Hormuz to stay open and the Fed to signal its rate path clearly.
The ceasefire collapses or oil remains above $100 because of continued supply disruption. Persistent energy costs reignite inflation, forcing the Federal Reserve to hold rates at 3.5 to 3.75 percent through year-end or even raise them. Consumer credit deteriorates as gasoline and energy costs squeeze household budgets. Banks begin building loan loss reserves in Q2, echoing the pattern from Q1 2020. Investment banking freezes as corporate boards wait for clarity.
Discussed by: Jamie Dimon (JPMorgan shareholder letter), Investing.com bank analysts
Consensus—
3
Stagflation scenario forces banks into defensive mode
The worst-case combination: oil at or above $120 sustained, inflation reaccelerating above 4 percent, and economic growth stalling. Dimon explicitly warned of this 'skunk at the party' scenario. Banks would see net interest income rise but loan demand collapse and credit losses spike. The private credit market, which Dimon flagged at $1.8 trillion, could face its first serious stress test. Bank valuations would compress significantly, repeating patterns from late 2022.
Discussed by: Jamie Dimon (recession and stagflation warnings), Fortune, The Hill
Geopolitical volatility fades, taking the tailwind out of trading desks that thrived on chaos. Goldman's record equities quarter proves to be a one-off rather than a new baseline. Banks return to mid-single-digit revenue growth driven by consumer lending and wealth management. This is the consensus base case embedded in the 17 percent earnings growth projection for the financial sector, but it depends on no further geopolitical shocks.
If Trump fires or forces out Powell before the May 15 term expiration, markets would face a sudden Fed independence crisis. A politically installed replacement might cut rates prematurely to support growth, reigniting inflation at exactly the moment energy costs are already elevated. Bank stocks would face a sharply bifurcated outcome: short-term net interest income could rise on rate confusion, but credit risk premiums would widen as investors lose confidence in the Fed's anti-inflation credibility. The scenario is constrained by the Federal Reserve Act, which limits presidential removal power, and Senator Tillis's confirmation blockade.
Discussed by: Legal scholars, former Fed officials, CNBC, CNN, NPR coverage of Trump firing threat
Q1 2020 bank earnings during the onset of the pandemic (2020)
April 2020
What Happened
JPMorgan reported earnings per share of $0.78 versus $1.84 expected, setting aside $8.29 billion in credit reserves — the largest build in years. Wells Fargo earned just $0.01 per share and later cut its dividend for the first time since 2008. All six major banks collectively built over $25 billion in reserves in a single quarter.
Outcome
Short Term
Bank stocks fell roughly 40 percent from February to March 2020. The massive reserve builds shocked investors even though the pandemic context was known.
Long Term
Most reserves were released in 2021 as the economy recovered, producing outsized bank profits. The episode demonstrated that proactive provisioning, while painful, signals institutional strength.
Why It's Relevant Today
Q1 2026 presents a similar question: are banks provisioning adequately for the Iran oil shock's potential downstream effects on consumers and businesses, or are they underestimating the risk as they did in early 2008?
Q1 2022 bank earnings at the start of the Russia-Ukraine war (2022)
April 2022
What Happened
Russia invaded Ukraine on February 24, 2022, and the Federal Reserve raised rates for the first time since 2018 on March 16. JPMorgan built $902 million in credit reserves while Goldman Sachs beat expectations on strong fixed-income trading revenue of $4.72 billion. Citigroup disclosed a $1.9 billion hit from Russia exposure.
Outcome
Short Term
The KBW Bank Index fell roughly 6 percent during the April reporting window. A bifurcation emerged: trading desks profited from war-driven volatility while investment banking pipelines froze.
Long Term
Banks with significant trading operations outperformed peers focused on traditional lending for the rest of 2022 as volatility persisted. The pattern of geopolitical crisis boosting trading revenue at the expense of deal-making proved durable.
Why It's Relevant Today
The same trading-versus-banking split is playing out in Q1 2026. Goldman's record equities quarter and 48 percent investment banking surge suggest the current conflict may be resolving the split faster than in 2022, but the oil shock is more severe.
Q3 2008 bank earnings during the global financial crisis (2008)
October 2008
What Happened
Lehman Brothers filed for bankruptcy on September 15. JPMorgan's net income fell 84 percent to $527 million. Goldman Sachs posted its first quarterly loss as a public company. Citigroup lost $2.8 billion for the fourth consecutive quarter. Several major banks either failed, were acquired, or required government bailouts.
Outcome
Short Term
The KBW Bank Index fell approximately 50 percent in the second half of 2008. The federal government committed $700 billion in taxpayer funds through the Troubled Asset Relief Program.
Long Term
The crisis produced the Dodd-Frank Act, Basel III capital requirements, and a fundamental restructuring of bank regulation. Banks that survived emerged with far stronger balance sheets and higher capital ratios.
Why It's Relevant Today
The 2008 crisis remains the benchmark for systemic banking stress. In Q1 2026, banks hold significantly more capital — Citigroup's capital ratio of 13.2 percent is roughly double pre-2008 levels — suggesting the system is far better positioned to absorb an oil shock than a credit crisis.
