Magazine article American Banker

Wall St. Raked in Record Pretax Profits of $2.43B in Third Quarter

Magazine article American Banker

Wall St. Raked in Record Pretax Profits of $2.43B in Third Quarter

Article excerpt

Riding the same wave that recently pushed the Dow Jones industrial average past the 5,000 mark, the securities industry enjoyed record revenue and earnings in the third quarter

Pretax profits for all New York Stock Exchange member broker-dealers climbed to a record $2.43 billion for the quarter, while revenue rose to a record $25.7 billion, the Securities Industry Association reported.

The pretax profits from the third quarter equaled those for the first two quarters combined.

"The third quarter was without a doubt an excellent quarter," said Katrina Blecher, an analyst at Gruntal & Co. "Companies were running on all cylinders," with high mergers and acquisitions activity, higher volumes, and a full underwriting calendar, she said.

Indeed, the average daily volume on the New York Stock Exchange in the third quarter was 341 million shares, 17% above 1994's full-year record daily volume. Nasdaq volume reached 443 million shares daily in the third quarter, 50% above 1994's full-year average.

"Several positive trends in the fixed-income and equity markets combined to make this a stellar year for investors and issuers raising new capital," said Jeffrey M. Schaefer, chief economist at the securities association.

Revenue from fixed-income markets is up because long-term interest rates for Treasuries have fallen about 20% from January, Mr. Schaefer said. "The success of issuers - and particularly investors - translated into a very strong year for the securities industry, which will raise more than $1 trillion in capital worldwide for the fourth consecutive year. …

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