In the third quarter of 2025, Wall Street’s heavyweight banks delivered a resounding signal that the long-dormant dealmaking engine is revving back to life. Goldman Sachs, JPMorgan Chase, and Citigroup all surpassed analysts’ earnings expectations, fueled by a surge in mergers and acquisitions, initial public offerings, and underwriting activities that had been stifled by high interest rates and economic uncertainty in prior years. This rebound not only bolstered their bottom lines but also hinted at broader confidence in corporate America, as executives dust off shelved plans for growth and expansion.

Goldman Sachs, often seen as the purest play on investment banking among its peers, reported a 42% jump in investment banking fees to $2.66 billion, according to details from its earnings release. The firm’s profit beat Wall Street estimates handily, with equity markets revenue also climbing amid volatile trading conditions. JPMorgan, the nation’s largest bank by assets, echoed this strength with a 12% rise in quarterly profits, driven by exceptional growth in advisory fees and markets revenue, as highlighted in coverage from Livemint.

A Surge in Advisory and Underwriting Fees

Citigroup, undergoing its own strategic overhaul under CEO Jane Fraser, achieved revenue records across all divisions, with investment banking playing a starring role. The bank’s shares edged higher in early trading, reflecting investor optimism about its simplified structure and ability to capitalize on the dealmaking uptick. As Business Insider reported, this collective performance marks a “banner year for dealmaking,” characterized by a rebound in M&A and IPOs after years of muted activity.

Yet, the enthusiasm was tempered by cautious outlooks from bank executives. JPMorgan’s leadership, while lifting its 2025 net-interest-income guidance, warned of potential headwinds from geopolitical tensions and market volatility, per insights from MarketScreener. Goldman Sachs similarly noted that while trading operations benefited from recent swings, the path ahead could be uneven, with shares experiencing a slight “sell-the-news” dip in pre-market trading despite the earnings beat.

Stock Reactions and Market Implications

Stock performance across these institutions painted a mixed picture. Goldman Sachs saw a modest decline initially, as investors digested the results against lofty expectations, but analysts from Reuters pointed to the firm’s robust asset management revenue as a buffer. JPMorgan’s shares climbed modestly after the report, buoyed by its diversified revenue streams, while Citigroup’s outperformance—outpacing peers in stock gains for the year—underscored its transformation efforts.

This earnings season underscores a pivotal shift for the banking sector. After a prolonged slump, the resurgence in deal activity is driven by lower borrowing costs and pent-up demand from corporations eager to pursue strategic mergers. As InvestmentNews detailed, JPMorgan and Goldman’s investment banking units were key drivers of the beats, with Citi’s across-the-board records adding to the narrative of recovery.

Broader Economic Signals and Future Outlook

Industry insiders view this as more than just quarterly wins; it’s a barometer for economic health. The pickup in M&A, for instance, reflects corporate boards’ growing comfort with the interest-rate environment, potentially signaling sustained growth into 2026. However, executives remain guarded, with Goldman Sachs CEO David Solomon emphasizing in the earnings call that while the pipeline is strong, external factors like elections and global trade could disrupt momentum.

For Citigroup, the results validate Fraser’s multi-year simplification strategy, which has streamlined operations and positioned the bank to compete more aggressively in fee-generating businesses. As noted in The Irish Times, Citi’s stock has outperformed most peers in 2025, trailing only Goldman Sachs, thanks to these reforms.

Challenges Amid Optimism

Despite the positives, not all metrics were uniformly rosy. Provisions for credit losses ticked up slightly across the board, hinting at potential consumer strains, though still below peak pandemic levels. Trading desks thrived on volatility, but as Fox Business observed, the dealmaking recovery is uneven, with smaller transactions dominating over mega-deals.

Looking ahead, these banks’ performances could set the tone for smaller rivals and the wider financial sector. If the deal pipeline holds, 2025 might indeed be remembered as the year Wall Street’s dealmakers reclaimed their stride, but sustained success will hinge on navigating an unpredictable global economy.