Goldman Sachs Shares Plunge – Wells Fargo Heads for Record Earnings

October 11 00:00 2011

New York, October 11 ( – Goldman Sachs (NYSE: GS) is headed towards its lowest quarterly profit since the 2008 financial crisis and as a result of poor performance, its shares have fallen 43 percent this year. On the other hand, Wells Fargo (NYSE: WFC) is all set to post record earnings. According to Richard Staite, an analyst at Atlantic Equities in London, US bank earnings for the third quarter are likely to indicate that investment-banking businesses like bond trading and merger advice have done badly whereas retail operations like mortgage lending have done well.

Staite said that “You’re going to see a big divergence between very poor earnings from pure capital-markets businesses and quite solid performance from the pure retail banks, particularly those that have a mortgage-origination business.”

Bank stocks have been weighed down by slowing economic growth and heightened worries about European sovereign debt throughout the year. Not a single bank out of the 24 members of the KBW Bank Index has shown any gain in 2011 and Bank of America has been the worst performer with a drop of 53 percent.

David Hilder, a New York-based analyst at Susquehanna Financial Group LLP said that “I hope European governments manage to come to a solution that causes an end to the kind of fear that the markets have lived through for the last 90 days,” and added that “if that happens, then I think you’ll see activity levels pick up, possibly in the fourth quarter and certainly in 2012.”