Disappointing earnings reports from JPMorgan Chase and Morgan Stanley have set the stage for a tense summer on Wall Street as bank executives grapple with whether to reduce staffing levels.

A decline in investment banking fees had always been expected this year after a record haul in 2021, but bankers were still hoping for an above-average performance, telling investors as recently as January that deal pipelines were healthy.

However, the slowdown has been worse than anticipated. Results on Thursday from JPMorgan and Morgan Stanley failed to meet analyst expectations in large part because of a dearth of equity issuance in 2022. The downturn follows a rush of initial public offerings and listings by special purpose acquisition companies last year.