Bank of America Drops Nearly 6% After CEO Moynihan Warns of 10%-Plus Decline in Q3 Investment Banking Fees

Bank of America shares fell as much as 5.7% on Monday, their worst single-day drop since April 2025, after CEO Brian Moynihan told the Barclays Global Financial Services Conference that third-quarter investment banking fees would come in at roughly $1.6 billion to $1.8 billion, a decline of more than 10% from the same period a year ago. That guidance stands in sharp contrast to the second quarter, when the bank posted a 50% jump in investment banking fees and a 33% surge in trading revenue. Moynihan added that third-quarter sales and trading revenue is expected to be roughly flat year over year.

The cautionary outlook rippled across the broader financial sector. Citigroup fell 2.6%, JPMorgan dropped 2%, and Goldman Sachs hit a session low, falling 4.1%. The selloff reflects investor concern that Wall Street's AI-driven dealmaking boom may be losing momentum heading into the back half of 2026.

Separately, BofA strategist Savita Subramanian raised the firm's 2026 year-end S&P 500 target to 7,400 from 7,100 and introduced a 12-month target of 7,800, implying only about 2% total upside from current levels near 7,657. Subramanian warned that a near-term pullback is likely, noting the index has experienced only one 5% correction this year versus a historical average of three, and that roughly half of BofA's classic bear-market signposts have been triggered. The firm remains constructive on corporate fundamentals, forecasting S&P 500 earnings growth of 33% in 2026 and 12% in 2027, and recommends positioning in large-cap value, select small- and mid-caps, and the equal-weighted S&P 500.

On a more positive note, Moynihan said consumer credit quality remains good and that loan growth among small and midsized businesses is rising. Bank of America Institute data showed card spending up 4.5% over the past year. The bank also dismissed calls to slow AI investment as "noise" in a secular bull market, projecting AI capital expenditure will top $3 trillion annually by 2030 and arguing that competition makes a coordinated industry slowdown unlikely.