Wall Street’s investment banking and trading stalwarts posted an uneven third quarter, as both equity and bond markets were rocked by ongoing wars, rising inflation and jitters about the massive spending in the AI buildout.

The results from JPMorgan Chase, Wells Fargo and others followed a stellar first half of the year, as a grinding selloff in global bond markets and stock-market volatility started to have an effect on the nation’s largest financial firms, particularly in the latter part of September, several executives said.

JPMorgan Chase, in particular, said market volatility and the uncertain economic outlook dampened dealmaking and reduced bond-market trading in recent months, and Wells Fargo also pointed to slowing activity in September.

“We saw …trading activity across our clients… slow meaningfully as you got in the last, you know, few weeks of September,” said CFO Mike Santomassimo on a media call, noting that the big jump in the benchmark 10-year yield has had an effect.

The bond market has experienced one of its worst selloffs in recent memory, driving yields around the world to levels not seen since early in the century. That, combined with the volatility in the equity market, has interrupted corporate dealmaking. The IPO market has lost steam in recent weeks, threatening what could have been a banner year for the investment banking business.

Analysts have said the IPO market has been selective, not shut, and delayed offerings could still launch if conditions stabilize during the fourth quarter.

JPMorgan executives said there had been a slowdown in investment banking activity, but the pipeline remained strong.

“I think all the overall conditions for the investment banking pipeline remain very, very strong,” said JPMorgan Chief Financial Officer Jeremy Barnum on a call with reporters. “Of course, we did see a slowdown I would say, kind of in the second half of September. So we’ll see how that flows through into the fourth quarter. But fundamentally, the pipeline is robust.”

Barnum said that during moments of market turmoil “the gap between buyers and sellers can widen temporarily before we find a new level.” He said that “big picture, I would lean more on the side of delayed rather than canceled.”

Citigroup CFO Gonzalo Luchetti said the bank saw softer investment banking activity in the third quarter following record first-half volumes.

“There is no doubt that high interest rates and the threat of continued Fed hikes is weighing on trading and IB activity in a measurably negative vector,” said Brian Mulberry, chief market strategist at Zacks Investment Management.

Equity Strength Persists

Still, banks saw strength in equity trading during a period of volatility. JPMorgan said revenue at its markets division climbed 15% in the third quarter from the prior year. Equity markets revenue surged 49%, as investors rejigged their portfolios on the back of uncertainty over global interest rates and surging energy prices.

Goldman Sachs beat third-quarter profit estimates, as dealmaking remained steady and volatile markets tied to the Middle East conflict lifted its equities revenue, even as its fixed income, currency and commodities business revenue dropped 1% from the year-earlier period.

Shares were mixed after results, with Wells Fargo and Citigroup lower in early Tuesday trading, while JPMorgan and Goldman rose.

“Our main concern with this and with other bulge bracket firms remains how much of the ‘beats’ seem concentrated in the equities trading business and how sustainable they will prove,” said Chris Kotowski, analyst at Oppenheimer & Co, in a note.

(Reporting by Manya Saini, Utkarsh Shetti, Pritam Biswas, Prakhar Srivastava, Tatiana Bautzer, Nupur Anand; Saeed Azhar and Nivedita Balu; Editing by Megan Davies and David Gaffen)