Merrill Lynch the largest Wall Street brokerage warned today that its second-quarter earnings would be as much as 37 per cent below expectations due to weak stock markets.
New York-based Merrill said results would be hurt by reduced trading volumes, lower market volatility and the impact of decimalisation on trading spreads in the Nasdaq.
The broker forecast revenues of $5.44 billion for the period, down about 15 per cent from $6.4 billion last quarter.
The profit warning follows lower quarterly operating results from Merrill’s competitors Goldman Sachs and Morgan Stanley, although those firms reported strength in fixed income operations in marked contrast to Merrill.
Merrill, whose client assets total about $1.6 trillion, said it expects second-quarter profits to come in between 52 cents and 57 cents per share, down from first-quarter earnings of 87 cents per share.
Merrill shares fell to $60.75 in pre-market trading about 9 per cent below their closing price of $66.45 on the New York Stock Exchange Monday.
The stock has a 52-week high of $80 and a 52-week low of $50.54.