Financial 411: New York Comptroller Says Wall Street Earnings Could Exceed $19 Billion
Tuesday, November 16, 2010
Wholesale prices rose in October. That's the fourth straight monthly increase, mostly due to higher prices for gas. Despite the increase in the price of raw materials, producers do not appear to passing on the higher costs to consumers.
Walmart, Saks Report Higher Profits
Today also brought a bevy of corporate earnings reports. Walmart increased its third quarter net income by more than nine percent, to $3.4 billion, and raised its profit outlook for the year. This, despite falling retail sales: the weak economy continues to limit how much and how often consumers shop at the nation's largest retailer. New York City-based Saks reported stronger profits, due in part to less discounting. Profits came in at $36 million this quarter.
Fed Defends Plan to Buy Govt. Bonds
New York Federal Reserve President William Dudley gave a rare broadcast interview to CNBC, defending the Fed's program to purchase government bonds. It's known as quantitative easing. When asked why higher interest rates have gone up rather than down as expected, Dudley said it was simple. For one thing, bond investors took note of an improving economy. And second, there are fresh worries over the fiscal health of Ireland and Portugal. "So the euro has weakened against the dollar, after strengthening versus the dollar," he said. "And I think the third issue, of course, is that the large scale asset purchase program, people were expecting it, and so it's probably a little bit of buy on the rumor, sell on the news."
In trading, worries about inflation in Asia and Europe send stocks sharply down. The Dow lost more than 178 points, to close at 11,023. The Nasdaq was off 44 points ending at 2,470. The S&P 500 lost 19 points, closing at 1,178.
Comptroller DiNapoli Issues Report on Wall Street Earnings
Profits at Wall Street firms are on track to bring in $19 billion, making 2010 the industry's fourth most profitable year in the last 30 years. New York State Comptroller Thomas DiNapoli said that while the profits are significant, they're still down nearly 70 percent from last year's record. The drop is due to lower revenues from trading and investment banking activities.
Since the beginning of 2008, the financial industry has shed about 30,000 jobs — or 16 percent. And last year, average wages dropped by nearly 20 percent, to $311,000. That's still about five times more than what other private sector workers earn.
New York State Comptroller Thomas DiNapoli joins us to review the report.