Another 8,000 Wall Street Jobs May Disappear : Lower Profits, Increased Interest Rates to Blame
Another 8,000 jobs in the U.S. securities industry may vanish in the next couple of months, on top of 16,000 jobs already lost because of last year’s market crash, industry analysts say.
Profits on Wall Street have been squeezed by shrinking stock volume and rising interest rates, raising the pressure to cut costs.
A stock trader at a major firm told Reuters that by the end of the year bonuses will be smaller than usual and that those who receive them will feel relieved to still have a job.
Further Cut Possible
At the end of March, New York Stock Exchange member firms doing business with the public employed 246,300 people, a reduction of 15,900 jobs from the heady days before the Oct. 19 crash.
A further cut of 8,000 jobs by the end of September is possible, according to Jeffrey Schaefer, director of research at the Securities Industry Assn.
Schaefer estimates that between 2,000 and 3,000 jobs were cut in the second quarter, although the exact number has not yet been compiled. Up to 5,000 more jobs could be cut in the current quarter, he said.
“I could see another 8,000 or so jobs being eliminated,” concurred Brenda Davis McCoy, an analyst with Paine Webber Inc. “Normal commission-generating volume, retail or institutional, is off significantly” from year-ago levels, she added.
Perrin Long, an analyst with Lipper Analytical Services, said the industry’s pre-tax income in the second quarter was down 50% from first-quarter levels and a further 20% drop is likely in the third quarter.
Long estimated that between 4,000 and 6,000 additional jobs could be eliminated this year with clerical and administrative jobs likely to be hit hardest.
Reuters contacted half a dozen major retail brokers and all said new layoffs are not planned.
“I don’t think a few days of volume below 100 million shares is going to set off another round of layoffs,” said a stock trader with a large firm.
Only 89.2 million shares traded hands Friday on the NYSE, the lowest volume in nine months. Although trading activity has picked up a little this week, it remains sluggish.
“You’re going to see some layoffs in October,” analyst Long said. “They’ll know by then what the third-quarter earnings were and management will be faced with some hard decisions about employees.”