JPMorgan Falls as Trading Woes May Force Job Cuts - Analyst Blog

A generic image of a person holding cash.
Credit: Shutterstock photo

Shares of JPMorgan Chase & Co. ( JPM ) have fallen nearly 1.5% since the Morgan Stanley Financial Conference held at New York on Wednesday. There, the company's Chief Financial Officer (CFO) Marianne Lake stated that in case trading revenues do not rebound as expected, there could be job cuts in the Investment Banking division, with compensation levels going down as well.

Notably, JPMorgan expects second-quarter 2014 market revenues to be down approximately 20% year over year. This is per the guidance provided in the quarterly filings with the Securities and Exchange Commission (SEC) in May 2014. (Read more: JPMorganto Witness 20% Drop in Q2 Market Revs )

The CFO stated that JPMorgan's magnitude will enable it to withstand the present slump in trading revenues which appears to be cyclical. However, in case the market lull continues over the longer term, management will have to seek avenues to aid bottom-line growth. One of the ways is to cut costs by lowering compensation expenses through job reductions.

Lake's statement comes amid declaration of job cuts by Morgan Stanley ( MS ) in the same conference on Tuesday. The company's Chief Executive Officer James Gorman had announced nearly 100 job cuts in the fixed-income currency and interest rates trading businesses. (Read more: Morgan Stanley to Slash Jobs in Trading Biz )

Almost all the major global banks are expected to report lower trading revenues for the current quarter. Apart from JPMorgan, Citigroup Inc. ( C ) anticipates total trading revenues to be down 20% to 25% year over year, while institutional revenues are expected to decline following lower trading activity.

Further, The Goldman Sachs Group Inc. 's ( GS ) president Gary Cohn, while blaming the monetary and fiscal policies at a Sanford Bernstein conference last month, did not quantify the actual decline in the company's market revenues,.

We expect JPMorgan to remain under continual pressure due to lackluster consumer and corporate activities, soft trading volumes and sluggish mortgage banking in the near term. In spite of noteworthy cost containment efforts, a low interest rate environment and sluggish loan growth will likely be persistent drags on top-line growth.

Currently, JPMorgan carries a Zack Rank #4 (Sell).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

MORGAN STANLEY (MS): Free Stock Analysis Report

CITIGROUP INC (C): Free Stock Analysis Report

GOLDMAN SACHS (GS): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos


    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

    Learn More