The start of Wall Street's earnings season is facing increased pressure due to a halt in dealmaking and a significant decline in financial stocks. Big banks such as JPMorgan Chase, Wells Fargo, Citigroup, Goldman Sachs, Morgan Stanley, and Bank of America all suffered losses ranging from 13% to 18% after the announcement of President Trump's new tariffs.

The broader US banking industry index also experienced a sharp drop of 15.5% over two days, marking its most substantial decline since March 2020. Concerns over the impact of Trump's policies and the market's response are challenging expectations for a surge in IPOs and mergers and acquisitions.

Several companies, including StubHub, Klarna, Chime, eToro Group Ltd., MNTN Inc., and Ategrity Specialty Holdings, postponed their IPO plans. Likewise, some M&A deals have been put on hold. Bank executives are considering revising revenue forecasts for their advisory businesses as uncertainties loom regarding a possible US recession and inflation.

The decline in long-term borrowing rates due to Trump's trade policies poses a profitability challenge for banks, making it harder to generate significant returns from loans. Analysts predict a reduction in annual loan growth guidance even without a recession. Despite the challenges, there is optimism that the Trump administration's efforts to relax regulations could benefit bank profitability.

The heightened trading volatility presents opportunities for the trading desks of major Wall Street institutions, which may offer some relief amidst the ongoing financial turmoil.