Big Board Companies Post Best Profits Since ’87 Crash

NEW YORK —  The New York Stock Exchange said Monday that its member firms in the first quarter racked up their best profits since before the October, 1987, stock market crash.

The earnings, sixth highest ever, were a shot in the arm for Wall Street, an industry that has been ravaged since the plunge in fall, 1987. Its ranks have shrunk an estimated 50,000 employees since then.

All 1991 is expected to be better than 1990, when Wall Street was hit by the emerging tension in the Persian Gulf.

“We’d have to have something really disastrous happen in the latter half of the year to get us nervous,” said Hugo Quackenbush, a senior vice president at Charles Schwab & Co.

Analysts and company officials agreed that first-quarter earnings were bolstered by a boom in stock prices and trading volume after the war began. Investor buying was based on optimism about the outcome.

Analysts also cited the industry’s continuing efforts to clamp down on costs as well as healthier returns from bond trading.

The Big Board said its 322 member firms that execute orders on behalf of the general public earned after-tax income of $957 million in the first quarter--the highest level since the first quarter of 1987.

That was a rebound from a $128-million loss in the fourth quarter of 1990 and $321 million in red ink the first quarter of that year.

Earnings got a boost from the jump in stocks the first quarter, when the Dow Jones industrial average zoomed up more than 10%.

“Trading profits lifted with the rise in prices,” said James Hanbury, an analyst at Wertheim Schroder & Co. “The market was higher all the time.”

Volume also exploded. Average daily turnover in January, for example, was 165.3 million shares. In February, it hit 224.9 million. For all of 1990, daily volume averaged 156.8 million.

However, the second quarter of the year doesn’t appear as robust as the first. Trading volume has slipped to 183.5 million shares a day for the year. The Dow Jones industrial average, after rising 11.6% the first quarter, is up just 1.7% in the second quarter through Friday.

“It’ll be down from the first quarter, but it will be better on average than 1990,” John Keefe, industry analyst for Lipper Analytical Securities Corp., said of industry profitability.

Keefe said drop-offs in stock-trading commissions and trading revenue because of the lower volume should be offset by an increase in equity securities underwriting. More companies have taken advantage of the improved market to issue new stock.

Brokerage Rebound Wall Street firms made money in the first three months of this year, following losses last year. Profit 1990 1st qtr. (342 firms*) -321 million After tax (1991 1st qtr. (322 firms*) $957 million Revenue 1990 1st qtr. (342 firms*) $13.5 billion After tax (1991 1st qtr. (322 firms*) $15.9 billion *NYSE members Source: New York Stock Exchange