(L-R) Brian Moynihan, Chairman and CEO of Bank of America; Jamie Dimon, Chairman and CEO of JPMorgan Chase; and Jane Fraser, CEO of Citigroup; testify during a Senate Banking Committee hearing at the Hart Senate Office Building on December 06, 2023 in Washington, DC.

Expectations are high that when banks start posting second-quarter results Tuesday, led by JPMorgan Chase and Bank of America , revenue from trading equities and fixed income will approach, or even exceed, the records set earlier this year.

That's a key part of what veteran analyst Mike Mayo of Wells Fargo calls the "sweet spot" in the financial sector right now. Both of banking's profit engines — Wall Street and Main Street — are in growth mode at the same time.

The largest U.S. banks are raking in rising fees from helping corporations tap the markets, punctuated by last month's giant SpaceX IPO, while risk-taking traders are also thriving as geopolitical unrest including the Iran war stokes volatility across asset classes.

"You saw the largest IPO in history, a pace of mergers that's on track to be a record year, and a broadening out of trading to include equity and fixed income across myriad geographies," Mayo told CNBC.

The quarter's big bank earnings come at an unusually favorable moment for the industry. After years of navigating higher interest rates and inflation-fueled recession fears, lenders are benefiting from a rare combination of booming Wall Street activity, resilient consumer credit and a long-awaited pickup in business lending.

"There's not much more you can ask for," Mayo said.

The trends, which coincide with the Trump administration's push to ease banking regulations, have helped financial stocks outperform the broader market for two straight years, Mayo noted. That streak also raises the stakes as investors look for signs the momentum can continue into 2027.

JPMorgan, Bank of America, Citigroup , Wells Fargo and Goldman Sachs are set to post results early Tuesday, with Morgan Stanley reporting Wednesday.