In the upcoming week, U.S. lenders will be disclosing their earnings, prompting investors to shift attention from profits to the responses of bank executives regarding the economy after President Donald Trump implemented significant tariffs, causing a market downturn.

Analysts are predicting a rise in reserves set aside by banks to cover potential loan defaults due to the increased probability of recession as a result of the tariffs. Loan losses are expected to surge this year since revised accounting regulations oblige lenders to factor in losses over the complete loan terms.

Notably, JPMorgan Chase, Citigroup, and Wells Fargo are scheduled to release their financial results on Friday. JPMorgan's CEO, Jamie Dimon, has voiced concerns about the detrimental effects of trade wars, such as inflation and economic downturns.

According to Stephen Biggar, head of financial institutions at Argus Research, banks are closely tied to the economy, implying that their performance mirrors economic conditions. Besides preparing for loan loss reserves, banks might also restrict lending activities due to heightened risks.

Given the recent market upheaval and its impact on bank stocks, analysts anticipate a decline in investment banking fees as market activity slows down during periods of high volatility. While equity portfolio losses may affect banks' wealth and asset management units negatively, their trading divisions might benefit from increased market activity.

Mike Mayo emphasized the importance of banks demonstrating the robustness of their balance sheets post-financial crisis regulations amid the current market turmoil.