St. Louis brokerage houses feel shockwaves from Wall Street
A crazy and painful day on Wall Street rippled through St. Louis on Monday, creating mixed results.
The financial industry took repeated head shots and body blows, as local financial firms shouldered what one insider called "unprecedented events."
Shares in Wachovia Corp. fell the most in more than 25 years as investors were spooked by the Charlotte, N.C., firm’s exposure to adjustable-rate mortgages and the perceived risk of loan write-downs. Wachovia’s stock fell 25 percent or $3.56 to close at $10.71 on the New York Stock Exchange, wiping out about $7.7 billion in market value.
St. Louis is the headquarters of Wachovia Securities, the company’s retail brokerage operation.
In other areas of the financial services sector, activity was fast and furious but not necessarily painful. If your business depended on people buying and selling stocks — and you didn’t have heavy exposure to mortgage-backed securities and other risky investments — Monday had an upside.
Scottrade Inc., the discount brokerage based in St. Louis County, was one such business. The company specializes in facilitating cheap stock trades, and makes money on trade commissions and interest.
Before the market opened, trading at Scottrade was three times heavier than on a normal day http://abc-cashadvance.com. And once the market opened, trading volume was up by a third.
Calls to the company’s national service center — the destination for calls that got bounced from Scottrade’s 370 branches — were double normal volume. Activity eventually leveled off a bit in the afternoon.
"It’s a good time for customers to pay attention," said Kelly Doria, spokesperson for the company, which has about 900 local employees.
Des Peres-based brokerage Edward Jones tracked similar surges in calls to its brokers, who also called clients proactively to try to coach them through a volatile day as the rapid deflating of Wall Street splashed across the news.
With about $500 billion in assets under care, privately held Edward Jones primarily sells mutual funds and investment-grade bonds. As a brokerage — and a conservative one at that — the company’s business model eschewed subprime loans that have poisoned banks’ balance sheets. Edward Jones, which has about 4,700 local employees, also avoided derivatives, futures, options and other complicated investments that might have delivered big gains but opened
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