NYT: Growing Signs of a Slowing on Wall Street

[DeepModem Mom]

Growing Signs of a Slowing on Wall Street
By LANDON THOMAS Jr.

Published: September 22, 2004


Wall Street's earnings growth, fueled by two years of robust trading gains, is showing signs that it may taper off in coming quarters as a sluggish stock market and a less-favorable trading environment take a toll on profits.

Having taken full advantage of the bull market in bonds, investment firms had entered the summer with the expectation that the nascent economic recovery would unleash a flood of high-margin banking deals and public offerings.

But, as the third-quarter results of Goldman Sachs showed yesterday, investment banking deals and initial public offerings have been in short supply, forcing the firm to continue to rely on its trading operations, which saw growth shrink by 26 percent compared with the previous quarter.

On the surface, Goldman's results were impressive; earnings up 30 percent from the quarter a year ago blew by the expectations of Wall Street analysts. Investors also cheered, pushing the stock up 3.5 percent for the day. Shares of Lehman Brothers, which reported that quarterly earnings rose 5 percent from a year ago, surged 5 percent.

Still, the sterling numbers from Goldman Sachs and Lehman mask a continuing slump in their investment banking and equities capital markets business that is likely to show up in the results of Morgan Stanley and Bear, Stearns, which report on Wednesday, and Merrill Lynch, which follows a month later. If the trend persists, 2005 may offer new challenges for Wall Street banks that continue to wait for a rebound in the ever-cyclical banking business....


http://www.nytimes.com/2004/09/22/business/22wall.html

[area51]

1. Wall St.'s conventional wisdom

Ah, but Wall Street's conventional wisdom says that republinazis in office are good for them & the economy. </sarcasm>

[sally343434]

2. "two years of robust trading gains"

HAHA. Yeah, that's it. Robust. I better write that down in case I forget.

[cspiguy]

3. yeah, that's why the FED raised rates again...

sheesh.