Despite a strong first half for Wall Street profits, the second half of 2015 faces uncertainty due to recent stock market volatility and “global economic turmoil,” New York state Comptroller Thomas DiNapoli said Tuesday.
Wall Street produced $11.3 billion in profits for the first six months of 2015, the strongest first half since 2011, Mr. DiNapoli said during a telephone news conference to discuss his annual review of New York City's securities industry.
During the first half of 2014, his office reported securities industry profits at $8.7 billion. Securities industry profitability is measured by pre-tax profits of the broker-dealer businesses of the New York Stock Exchange.
Sources of Wall Street uncertainty for the second half of 2015, Mr. DiNapoli added, are recent stock market fluctuations, weakness in the global economy — most notably China — and financial markets' concerns over when the Federal Reserve will raise short-term interest rates.
The first-half gains were aided by a decline in legal settlements related to the 2008 financial crisis, said Mr. DiNapoli, who is the sole trustee of the $182.5 billion New York State Common Retirement Fund, Albany.
A report by Mr. DiNapoli's office on the securities industry's role in New York City estimated that the aggregate cost of legal settlements for the six largest bank holding companies was more than $134 billion since 2010. “Nearly two-thirds of the dollar value of these cases was settled in 2013 and 2014,” said the report that was issued Tuesday. “It appears that most investigations related to the 2008 financial crisis have been concluded.”
The report said the securities industry in New York City employed 174,000 people through August 2015, seasonally adjusted. The industry added 2,300 jobs last year, the first gain since 2011.
It was “on pace to add another 4,500 jobs in 2015 before the recent market downturn,” the report said. Although Mr. DiNapoli said stock market and global economic factors could hamper Wall Street hiring for the rest of the year, he didn't make a prediction.
The securities industry in New York City is 9% smaller than it was before the 2008 crisis. Twenty-five years ago, New York City had a 32% share of securities industry employment nationwide. Last year, it was 19%. The decline is due “primarily because of geographic diversification, new technologies and cost-cutting,” the report said.