Goldman Sachs Group Inc. and JPMorgan Chase & Co. — two of the most gilded names in finance — kicked off bank earnings season with revenue windfalls from trading and dealmaking, defying warnings from within the industry that good times couldn’t last. The boon was thanks in part to the burgeoning optimism of little investors who tried to stage a trading revolution in January.

Goldman Sachs earned more from trading in the first three months of the year than it had in any quarter in the past decade, while JPMorgan saw such revenue climb 25%. Stock underwriters at both firms posted the most revenue ever after helping a flood of blank-check companies — often known by their acronym SPAC — tap investors to build war chests for future takeovers.

“Wow,” Susan Roth Katzke, an analyst at Credit Suisse Group AG, said in a note to clients about earnings at Goldman Sachs, which leans more heavily on Wall Street operations than rivals. “Impressive all around.”

Goldman Sachs’s stock jumped 4.7% as of 11:30 a.m. in New York. JPMorgan’s slipped 0.3%, undermined by concern over weak demand for loans.

Strong Trading

For months, executives and analysts have been cautioning that last year’s pandemic-fueled market turmoil and demand for cash that propelled trading and dealmaking were easing, and that earnings in 2021 would be characterized by tough comparisons to those year-earlier periods.

Instead, traders seem to have had a Goldilocks moment as the year began.

In January, retail investors organized on forums such as Reddit drove up GameStop Corp. and other so-called meme stocks that had been beaten down by mainstream finance, making day trading an international sport. Volumes stayed elevated across markets even as volatility began receding by the end of the quarter, according to Goldman’s earnings presentation.

In all, Goldman’s traders boosted revenue 47% to $7.58 billion — more than $2 billion higher than what analysts had projected. Goldman’s dealmakers were busy too, more than doubling investment-banking fees, excluding corporate lending.

At JPMorgan, the firm’s stock-trading revenue jumped 47% to $3.29 billion, topping even the highest analyst estimate gathered by Bloomberg. Investment-banking fees soared 57% to $2.99 billion.

Still, JPMorgan and Goldman’s results might not translate to jubilee across Wall Street. Both firms warned that they saw lower revenues from their businesses of trading currencies — an area where Citigroup Inc. dominates. Citigroup and Bank of America Corp. are expected to post quarterly results on Thursday. Morgan Stanley reports Friday.

For those minting profits, the question again is whether that will last. Goldman Sachs Chief Executive Officer David Solomon wasn’t making promises.

“The first quarter was an extraordinary quarter,” he told analysts on a call. “I don’t think the expectation should be that activity will continue at that pace through the second quarter, the third quarter, the fourth quarter. But I will say activity levels continue to be elevated.”

–With assistance from Hannah Levitt and Sridhar Natarajan.