By Daniel Huang And Chelsey Dulaney
Jefferies Group LLC said earnings plunged in its fiscal first
quarter amid a 56% drop in fixed-income trading revenue.
Jefferies said the year got off to a slow start due to a tepid
fixed-income trading environment, but the boutique investment bank
expressed optimism about its prospects for the remainder of the
year as markets appear to have stabilized.
Viewed by some in the industry as a harbinger of results for
other Wall Street firms, the investment-banking unit of Leucadia
National Corp. reported Tuesday that its profit fell to $11.7
million from $112.4 million a year earlier. Revenue fell 34% to
$591.7 million for the quarter ended Feb. 28.
The latest results from Jefferies follow a downtrodden fourth
quarter for many of the largest U.S. banks, with four of the six
biggest-- J.P. Morgan Chase & Co., Bank of America Corp.,
Citigroup Inc. and Morgan Stanley--missing analysts' estimates. A
surge in volatility last quarter spooked many investors into
pulling out of the market, causing a steep drop in trading revenues
at banks with sizable trading platforms. The big six U.S. banks saw
their first annual profit drop since the financial crisis,
according to SNL Financial.
More recently, some bank executives have said trading has picked
up during the two months of the year. Because Jefferies' quarter
ends one month earlier than other banks, its results are considered
by some to be indicative of how other Wall Street investment banks
will fare, especially in trading businesses. March isn't included
in the quarterly results released by the securities firm Tuesday
morning.
Jefferies also reported lower investment-banking revenue of $272
million, down 34% from the same period a year earlier.
Fixed-income revenue fell to $126 million from $285.9
million.
Write to Daniel Huang at daniel.huang3@wsj.com and Chelsey
Dulaney at Chelsey.Dulaney@wsj.com
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