Financial Services: No Ordinary Downturn

The current slump is hurting IPOs and could cause layoffs

What started as a modest decline in the Nasdaq prior to the third quarter's earnings season has greatly accelerated in recent weeks. And the downturn has cast an especially powerful hex on the financial services industry. Fees from technology and telecommunications initial public offerings and high-yield bonds that propelled brokerages to astronomic heights have begun to tank. And if the market remains weak, depressed trading volumes and more limited equity gains on in-house portfolios could eat further into earnings. Shares of the financial giants are now off by as much as 30% since their highs in September.

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