Banks Face Softer Q3 Outlook on Weaker Capital Markets, Evercore Says

Major banks may deliver softer-than-expected guidance for the third quarter as key business metrics lag consensus forecasts, according to a new analysis by Evercore. The firm's August 2026 Capital Markets Monthly report suggests that current Wall Street earnings per share (EPS) estimates for the quarter may be too high.

Guidance Expected to Weaken

Evercore anticipates that upcoming guidance for investment banking and trading revenues will likely come in below current market expectations. The firm noted that quarter-to-date key performance indicators (KPIs) are tracking behind schedule, signaling a potential downward revision for bank earnings.

Commentary on wealth and trust fees is expected to be more stable, likely aligning with or coming in only slightly below consensus, the report added. Evercore also observed that investors appear to be aware of the slowdown, as bank shares and valuation multiples have already pulled back in response to weaker economic data, higher interest rates, and rising oil prices.

A Mixed Picture in Investment Banking

Overall investment banking volumes showed weakness in July, declining 6% year-over-year, according to the report. The decline was primarily driven by a significant drop in debt-related activities.

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• Debt Capital Markets (DCM) and syndicated lending fell by 18% year-over-year.
• In contrast, Equity Capital Markets (ECM) activity surged by 119%.
• Mergers and Acquisitions (M&A) advisory also showed strength, with activity rising 11%.

Trading Activity Shows Pockets of Strength

Trading desk performance improved after a slower start in July. For the third quarter to date, most metrics in the Fixed Income, Currencies, and Commodities (FICC) division are tracking in the low to high double digits year-over-year. Foreign exchange and commodities volumes were both up 17%, while credit volumes rose 10%.

Equities trading presented a more mixed result. While CBOE volumes fell 4% year-over-year, retail activity climbed 43% and options activity increased 14%. The report also noted that margin balances have remained stable, with average quarter-to-date balances up 32% from the previous year.