Despite recent stock market volatility, JPMorgan Chase (JPM 0.15%) shares are down just 1% year to date, outperforming the 9% decline in the S&P 500 (^GSPC 0.11%) at the time of writing. The banking giant continues to benefit from its fortress-like balance sheet and global diversification, making it well-positioned to navigate any economic environment.
That was the message from CEO Jamie Dimon presenting the bank's first-quarter earnings report (for the period ended March 31). JPMorgan topped Wall Street estimates, with revenue climbing 8% year over year, while earnings per share (EPS) of $5.07 was up 14% from the prior-year quarter.
Yet the results arrived with a tone of caution. Jamie Dimon also said the U.S. economy faces "considerable turbulence" amid the looming impact of trade tariffs being implemented by the Trump administration.
Let's discuss what tariffs and a trade war might mean for JPMorgan and its stock price outlook now.
NYSE: JPM
Key Data Points
JPMorgan Q1 earnings recap
JPMorgan started the fiscal 2025 year off strongly, with all three of its business segments delivering revenue growth.
The flagship Commercial & Investment Bank group saw excellent momentum, driven by optimism about the economic outlook at the beginning of the year and record market levels that propelled trading activity and deal-making. In the Consumer & Community Banking division, card services and auto lending have been growth drivers, reflecting resilient consumer spending. Asset & Wealth Management has also been a bright spot as continued net inflows boosted fee income.
Some of the key financial metrics that stood out in the first quarter include a 2% year-over-year increase in average loans and deposits, while JPMorgan's book value per share rose 12% compared to Q1 2024, reaching $119.24.
Although it may have been business as usual for the bank in the first quarter, the outlook has grown increasingly uncertain. Officially, the bank is guiding for full-year net interest income of $94.5 billion, a 1% increase from last year. However, this number isn't etched in stone, since it depends on the rapidly changing macroeconomic environment. For now, the escalating trade tensions present an operational and financial headwind.
The tariffs fallout
In recent weeks, the Trump administration announced a major U.S. trade policy overhaul, implementing a 10% baseline tariff on most imports, with significantly steeper tariffs on specific countries like China. Although Trump has since rolled back some steps, pausing higher reciprocal tariffs for 90 days for most countries and allowing for some exceptions, experts warn that the measures may still cause economic disruptions. JPMorgan's chief U.S. economist Michael Feroli now estimates a 50% recession probability, indicating that the bank is taking the risks seriously.
While it's too early to fully assess the effects of the tariffs, the widespread market confusion as companies across all sectors adjust to the new environment has several implications for JPMorgan's outlook.
Image source: Getty Images.
There are already indications that mergers and acquisitions have stalled, with dealmakers taking a wait-and-see approach. Companies are likely to reassess hiring plans or push back on major capital investments. For JPMorgan, this means a potential slowdown in its core investment banking business and commercial lending.
If a recession does materialize, the consumer banking side of the business would be particularly hard-hit, as loan defaults rise, adding to credit losses. Even with some areas of the bank, such as trading, possibly benefiting from the market volatility across equities and fixed income to offset declines in fees elsewhere, the risk to earnings is tilted to the downside.
All this is happening while shares of JPMorgan don't necessarily stand out as a great bargain. Across multiple metrics including the stock's price-to-earnings (P/E) ratio of 11.6 and price-to-book (P/B) value of 2.0, JPMorgan continues to trade at a premium relative to its average valuation multiples over the past five years. One interpretation is that if conditions deteriorate, the stock has room to fall further.
JPM PE Ratio data by YCharts.
Is JPMorgan a buy?
Among bank stocks, few rival JPMorgan's strong fundamentals and disciplined capital management, offering shareholders a source of portfolio stability even in a severe economic downturn. A swift de-escalation of trade tensions through clearer policies or negotiations could catalyze a stock rebound. For now, I'm not convinced shares are a buy, and a cautious wait-and-see approach remains prudent.
