The front page of this morning's New York Times discusses how the slowdown in trading and general market activity is hitting Wall Street.
The interesting part of the piece, to me, is that fact that even the overall volume in the bond area is not at the levels of a year ago, despite very low interest rates:
Worldwide, the number of stock offerings is down 15 percent from this time last year, while bond issuance is off 25 percent, according to Capital IQ, a research firm. Based on these trends, Ms. Whitney predicts that annual revenue from Wall Street’s main businesses will drop 25 percent, to around $42 billion in 2010, from $56 billion last year.
While the numbers will not be known until after the third quarter ends and financial companies begin reporting earnings in October, the pace of trading this summer was slow even by normal summer standards. Trading in shares listed on the New York Stock Exchange was down by 11 percent in July from 2009 levels, and August volume was off nearly 30 percent.
“What’s happened in the third quarter is that after a very slow summer, people expected things to come back,” said Ms. Whitney. “But they haven’t, and the inactivity is really squeezing everyone.”
Now, I suspect most people are not too worried about Wall Street. However, it does raise a possible caution flag for stocks in the financial sector, which could impact the broader market indexes. Financial stocks represent 16% of the S&P 500 market capitalization, and an even larger part of the overall S&P profits, so this is a trend that bears watching.
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