The Wall Street Journal reported on July 16 that the investment banking revenue of multiple Wall Street banks rose by double-digit percentage levels last quarter. As a result of increased economic stability in the U.S., the firm’s corporate clients utilized more banking services, including deal advisory and debt offerings. Moreover, many firms’ asset-and-wealth management revenue jumped in Q2. I believe that the latter increases were largely spurred by the trading upticks these institutions experienced.

Specifically, Wall Street firms’ success in trading spurred more wealthy clients to invest larger funds with these companies’ wealth management units. Meanwhile, with the stock market climbing and interest rates expected to fall further, the number of initial public offerings and mergers and acquisitions will likely increase greatly in the second half of the year, benefiting many Wall Street firms. Here are three trading volume stocks to buy to benefit from these strong trends.

JPMorgan (JPM)

JPMorgan (NYSE:JPM) appears to be already benefiting significantly from the improvement in the trading, corporate banking and wealth management businesses I described in this column’s introduction. That’s because the firm’s investment banking fees surged 50% versus the same period a year earlier, while its overall market revenue advanced 10% year-over-year. As a result, I view the name as one of the best trading volume stocks to buy.

Moreover, CFO Jeremy Barnum indicated that he expects the bank’s investment banking revenue to increase further going forward. He said, “The dialogue on [equity capital markets] is elevated, and the dialogue on M&A is quite robust as well — so all of those are good things that encourage us and make us hopeful that we could be seeing sort of a better trend in this space.”

JPM stock is changing hands at a low forward price-to-earnings ratio of 12.5 times, while the shares have a significant dividend yield of 2.2% after the bank increased its payout by 19% this year.

Nasdaq (NDAQ)

Nasdaq (NASDAQ:NDAQ) primarily generates revenue by selling trading technology products and charging companies to list on its stock exchange. These businesses should benefit significantly from the Street’s rebound in the second half of the year. Specifically, the demand for Nasdaq’s trading technology products should increase as institutions’ trading revenue and activity increase. Meanwhile, the stock market’s rebound and increased optimism about equities should result in more IPOs and stock offerings, improving the performance of the firm’s stock exchange.

These dynamics may already be playing out, as the firm reported strong second-quarter results on July 15. Specifically, its top line advanced by 10% compared to the same year-earlier period. Moreover, its operating income, excluding certain items, jumped 28% year-over-year to $620 million.

Also encouragingly, CEO Adena Friedman reported on the firm’s Q2 earnings call on July 25 that “we continue to see sustained robust trading activity in the markets as well as strong demand for mission-critical technology solutions from financial institutions globally.”

The shares have an attractive forward price-to-earnings ratio of 23.3 times.

KKR (KKR)

KKR (NYSE:KKR) is a private equity firm that specializes in investing in companies and selling them later at higher prices. The firm should benefit tremendously from declining interest rates, which will entice more companies to carry out mergers and acquisitions. Additionally, as investors become more interested in buying medium-cap and small-cap stocks, KKR should be able to profitably take more of the companies that it owns public.

Citi issued a positive note on KKR stock last month, indicating that the company’s performance is improving. The bank expects KKR’s investor money to climb to $33 billion in Q2, versus $31 billion during the previous quarter. Moreover, Citi believes that KKR was also able to sell more of its assets last quarter compared to Q1.

Analysts, on average, expect KKR’s earnings per share to have jumped to $1.09 last quarter, compared with 97 cents in Q1 and 81 cents in Q2 of 2023.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.  

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.