Wall Street Stumbles Amid COVID-19 Economic Downturn... Sharp Earnings Drop and Layoffs Follow

[Image source=AP Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Concerns over an economic recession due to the novel coronavirus infection (COVID-19) have swept Wall Street. The first-quarter earnings of major Wall Street banks, including BlackRock, the world's largest asset management company, have plummeted, and it is reported that the large investment firm Canter Fitzgerald is undergoing layoffs.

According to local U.S. media such as The Wall Street Journal (WSJ) and Bloomberg News, the first-quarter earnings of major Wall Street banks have been cut in half. Goldman Sachs reported a first-quarter net income of $1.21 billion (approximately 1.4713 trillion KRW), down 46% from the same period last year. Citibank also saw a 46% decrease to $2.52 billion, and Bank of America (BoA) recorded a 45% decline to $4.01 billion during the same period.

David Solomon, CEO of Goldman Sachs, stated, "We are experiencing adverse effects due to the COVID-19 situation," adding, "We will reduce some of the initially planned investments and prepare plans with the possibility of a recession occurring next year in mind."

JP Morgan and Wells Fargo also saw their first-quarter net incomes plunge by 69% and 89%, respectively.

BlackRock, the world's largest asset management company, reported that its assets under management in the first quarter of this year decreased sharply by 12.5% from the previous quarter to $6.5 trillion (approximately 7,947 trillion KRW). This is a significant drop from the previous quarter's $7.43 trillion (approximately 9,084 trillion KRW). Accordingly, BlackRock's revenue is projected to slightly increase to $371 million compared to the same period last year, while net income during the same period is expected to decrease by 2% to $203 million.

As Wall Street financial firms are affected by the COVID-19-induced economic downturn, some have begun layoffs to reduce costs. The large investment firm Canter Fitzgerald is confirmed to be conducting layoffs targeting less than 5% of its total workforce. Canter Fitzgerald employs approximately 12,000 people, and some layoffs have already taken place.

Meanwhile, concerns are spreading that layoffs may sweep through Wall Street starting with Canter Fitzgerald's reductions; however, Morgan Stanley, Goldman Sachs, and Citigroup have stated that they currently have no plans for layoffs.

This content was produced with the assistance of AI translation services.