Six major Wall Street firms were warned Tuesday that their credit ratings could be downgraded, in a sweeping sign that the profound slump in the securities industry is not expected to end soon.
Standard & Poor's, a major ratings agency, said its unusually broad assessment was prompted by persistent turbulence in key financial markets and a downturn in trading and underwriting securities, factors that steadily hammered profits this past year.
"This reflects the general belief . . . that the outlook for the industry over the balance of 1995 and into 1996 is far from certain," said Perrin Long, a securities industry analyst with Brown Brothers Harriman & Co.
The firms cited by S&P are Bear Stearns Cos. Inc.; CS First Boston Group Inc.; Goldman Sachs Group LP; Morgan Stanley Group Inc.; PaineWebber Group, and Salomon Inc.
Standard & Poor's Ratings Group said individual companies could be downgraded if profits worsen or further market turbulence increases risks of trading losses.
The drop in the bond and other financial markets was triggered by a series of interest rates hikes, which began in February 1994 and were the first in five years.
"Until we have a more stable market environment, we don't feel comforted by what we see out there now," S&P analyst Jake Newman said in a phone conference with analysts and reporters.