JPMorgan Chase is set to report second-quarter earnings – here’s what the Street expects

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JPMorgan Chase is scheduled to report second-quarter earnings before the opening bell Thursday.

Here's what Wall Street expects:

JPMorgan, the biggest U.S. bank by assets, will be watched closely for clues on how the banking industry fared during a quarter marked by conflicting trends.

On the one hand, unemployment levels remained low, meaning consumers and businesses should have little difficulty repaying loans. Rising interest rates and loan growth mean that banks' core lending activity is becoming more profitable. And volatility in financial markets has been a boon to fixed income traders.

But analysts have begun slashing earnings estimates for the sector on concern about a looming recession, and most big bank stocks have sunk to 52-week lows in recent weeks. Revenue from capital markets activities and mortgages has fallen sharply, and firms could disclose fresh writedowns amid the broad decline in financial assets.

Importantly, a key tailwind the industry enjoyed a year ago — reserve releases as loans performed better than expected — could reverse as banks are forced to set aside money for potential defaults as the risk of recession rises.

Back in April, JPMorgan was first among the banks to begin setting aside funds for loan losses, booking a $902 million charge for building credit reserves in the quarter. That aligned with the more cautious outlook of CEO Jamie Dimon, who warned investors last month that an economic "hurricane" was on its way.

Beyond the results of the second quarter, analysts will be keen for any updates Dimon has on his economic forecast. Inflation has proven to be more stubborn than expected, with the U.S. consumer price index surging 9.1% in June alone.

As a result of all the