The industry that America loves to hate or envy may have a tough summer ahead of it, especially for the highest paid executives.
Reports indicate Wall Street firms are far from recovering the numbers lost during the financial crisis and may impose additional layoffs this summer or in coming months.
Due to uncertainty from the European fiscal crisis, the stock market has seen much of its gains from the year disappear.
Goldman Sachs and Morgan Stanley may lay off workers in the coming weeks as the European financial crisis continues to affect U.S. markets, the New York Post reported.
Though the Dow Jones Industrial Average closed up 0.22 percent on Tuesday to 12,128, the index had four prior days of declines as world leaders discussed the possibility that Spain and Cyprus will need financial aid.
Brian Foley, pay consultant and managing director of Brian Foley & Co. in White Plains, N.Y. said the recent reports of 50 layoffs at Goldman and 100 at Morgan Stanley, "if true, are certainly very tough on those laid off, but they are too small at present to make for a broad significant new downturn by themselves, given the size of the firms in question."
Morgan Stanley, which has about 62,000 employees, already cut its staff by 2,935 in the year that ended on March 31.
Mary Claire Delaney, spokeswoman for Morgan Stanley, declined to comment.
Goldman Sachs reportedly laid off 50 employees last week, many of whom were managing directors who make a base of $500,000 and receive an annual bonus, the New York Times reported. Goldman Sachs reported it had 33,300 employees, including consultants and temporary staff, at the end of 2011.
A spokesman for Goldman Sachs declined to comment.
Citigroup and Barclays Capital did not return requests for comment.
At this stage, Foley said layoffs "will continue to generally be done on an "opportunistic" basis here and there" in "smaller lower-profile waves," with some exceptions.
Brad Hintz, research analyst with Sanford C. Bernstein & Co., said to reduce costs "the Street" does not have to shed large numbers of employees; "just highly paid employees."
The percent of managing directors in fixed income trading, Wall Street's most highly paid employees, is declining to 10 percent of total head count from 20 percent, Hintz said.
Hintz said it's not only concerns about Europe's debt crisis, but regulatory changes that are leading to uncertainty and the possibility of further job cuts.
In particular, firms are re-sizing certain trading units and staff groups that support their fixed income businesses, he said. Banks must adjust to higher capital charges and having lower leverage as a result of Basel III regulatory standards.
Another reason for banks' headcount changes are "massive changes in market making" associated with the Volcker rule, the impending Dodd-Frank Act regulation that prohibits banks from making risky trades with their own capital.
The competition may be even tighter this year for finance professionals, though 59.9 percent of 500 financial services jobseekers said they were optimistic about job market conditions in a survey published on May 8. Just eight months prior to that, only 32.4 percent of respondents were optimistic.
Brin McCagg, president and chief operating officer of OneWire.com, an online job recruitment tool, said the survey results may lean less optimistic after Friday's jobs report which showed the unemployment rate increased to 8.2 percent. But he said applicants' sentiment will not swing as far as it did eight months ago.