Wall Street investment banking slammed, as execs hope for more confidence ahead

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Wall Street banks showed deep falls in their investment banking businesses in the fourth quarter, prompting thousands of job cuts, but executives are looking for signs that corporate CEOs are regaining confidence in doing deals again.

reported a plunge in fourth quarter profits on Tuesday, as Wall Street dealmakers handling mergers, acquisitions and initial public offerings faced a sharp drop in their businesses in 2022. Rising interest rates roiled markets last year and global investment banking revenue sank more than 50% from a year-earlier quarter, according to data from analytics firm Dealogic.

"I am highly confident that when the Fed pauses , deal activity and underwriting activity will go up," said Morgan Stanley Chief Executive Officer James Gorman on the bank's earnings call. "CEOs and boards tell me they are cautious, particularly for the near term," said Goldman Sachs chief executive David Solomon who said that there was an adjustment period for investment banking to return, as investors or CEOs re-adjust their views about valuations after slides in the market.Solomon also said that the first sign to look for would be in the investment grade debt market.

 

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