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In preparation for tougher times, Goldman Sachs has slowed its hiring and is looking to reduce vendor fees. However, according to a person with knowledge of the matter, Goldman has another tool in its arsenal to control expenses: a possible return to year-end job cuts. It has long been a practice of Wall Street firms to weed out those they deem to be underperformers, often at the end of the year when they prepare to award their annual bonuses. Due to the pandemic, this annual exercise was paused as banks hired furiously to take advantage of a boom in deal activity. According to figures disclosed Monday, Goldman’s headcount increased by 15% to 47,000 employees in the past year alone. These workers may have been acquired, but they still represent a significant increase.

Wall Street’s leading investment bank is contemplating a return to its year-end ritual following a sharp decline in revenue related to debt and equity issuance. Employees often make up the single biggest line item regarding expenses at an investment bank. As of June 30, Goldman had set aside $7.78 billion for workers’ compensation and benefits, or half of its overall operating expenses. In a conference call with analysts on Monday, Denis Coleman, the firm’s Chief Financial Officer, stated that the firm would slow its hiring to replace those who leave and would “probably” reinstate performance reviews by the end of the year. That is “something that we suspended during the period of the pandemic for the most part,” he said.

At the central bank’s meeting later this month, Governor Christopher Waller said he is willing to consider what would be the most aggressive interest rate hike in decades. It is expected that Waller will support a 75 basis point hike at the meeting on July 26-27. However, he will be monitoring data and remaining open-minded regarding what the Fed should do to control inflation, which has been running at its fastest pace since 1981. The rate-setting Federal Open Market Committee approved a 75 basis point move in June, the largest one-month increase since 1994.

“I support another 75-basis point increase” at the next FOMC meeting, Waller said in remarks at an event in Victor, Idaho. “However, my base case for July depends on incoming data,” he added. “We have important data releases on retail sales and housing coming in before the July meeting. If that data comes in materially stronger than expected, it would make me lean towards a larger hike at the July meeting to the extent it shows demand is not slowing down fast enough to get inflation down.” Worries are mounting that the U.S. is headed for or already in a recession, but Waller said the strength of the jobs market has him “feeling fairly confident that the U.S. economy did not enter a recession in the first half of 2022 and that the economic expansion will continue.” Even with the Fed tightening, he said he thinks the economy can achieve a “soft landing” that won’t include a recession. U.S. GDP contracted 1.6% in the first quarter, and the Atlanta Fed’s GDPNow tracker indicates a 1.2% decline in Q2, meeting the rule-of-thumb definition of a recession.

On Friday, the Nasdaq Composite rose in choppy trading as investors responded to a stronger-than-expected jobs report that may keep the Federal Reserve on track for its aggressive rate increases. The Nasdaq gained 0.12% to settle at 11,635.31, while the S&P 500 dipped 0.08% to 3,899.38. The Dow Jones Industrial Average closed down 46.40 points, or 0.15%, at 31,338.15. The Nasdaq has risen for five straight days for the first time this year. The Bureau of Labor Statistics reported Friday that nonfarm payrolls increased 372,000 in June, exceeding the Dow Jones estimate of 250,000 and continuing a strong year of employment growth.

For the week, all three major averages ended in positive territory. The jobs report and a recent decline in commodities prices have made a so-called “soft landing” for the U.S. economy a bit more likely, boosting stocks, said Yung-Yu Ma, chief investment strategist at BMO Wealth Management. Health care stocks were among the outperformers. Centene Corp. and McKesson rose more than 3%, while vaccine makers Moderna and Regeneron each added more than 2%. Electric automaker Tesla jumped 2.5%. Chipmakers and cyber security stocks also boosted the tech sector. ON Semiconductor rose 2.8%, while Fortinet gained 1.8%. Treasury yields jumped sharply after the jobs data was released, which may have limited stock gains. The 2-year Treasury yield held above the 10-year Treasury yield, an inversion many see as a recession indicator. Though the jobs report was a positive sign for the state of the U.S., many investors believe that will aggressively allow the Federal Reserve to fight inflation with rate hikes in the coming months.

As the market prepares to close out the worst first half of the year since 1970, stocks fluctuated on Wednesday, following a failed attempt by the major averages to bounce earlier in the day. The Dow Jones Industrial Average finished the day up 82.32 points, or 0.27%, to 31,029.31, while the other benchmarks closed slightly in the red. The S&P 500 slipped 0.07% to 3,818.83, and the tech-heavy Nasdaq Composite inched lower by 0.03% to 11,177.89.

Investors continued their search for the bottom of a vicious market sell-off as the second quarter ended Thursday. Fears of a recession are growing due to concerns about a slowing economy and aggressive rate hikes in the first half of 2022. “We expect significant volatility this summer, with ‘face-ripping’ short-covering rallies followed by economically-inspired market slumps,” Wells Fargo senior equity analyst Christopher Harvey said in a note Wednesday. “While a much anticipated market ‘washout’ could catalyze a more sustained move higher, we think the market will not sustain a rally until it believes the Fed will toggle from a 50-75bp tightening to a more mundane 25bp increase.” The S&P 500, down about 20% in 2022, is on pace for its worst first half of the year since 1970, when the index lost 21.01%. Meanwhile, on a quarterly basis, both the Dow and S&P 500 are on track for their worst performance since 2020. The Nasdaq is headed toward its worst three-month period since 2008. On Wednesday, General Mills shares rose about 6.4% after the company topped earnings and revenue forecasts for its most recent quarter. Shares of Goldman Sachs added nearly 1.3% after Bank of America upgraded them to a buy and said the bank would thrive even in an economic slowdown.

Shares of HP Inc. on Thursday soared higher after Securities and Exchange Commission filings revealed that billionaire investor Warren Buffet had built a $4.2 billion stake in the Pc and printer maker. According to the SEC filings published late Wednesday, Berkshire Hathaway BRK, an investment group, now owns an 11.4% stake in the Palo Alto, California-based group. The move adds to Buffet’s recent buying after new stakes in oil major Occidental petroleum.

Buffet lamented that few companies or deals were able to pique his interest as Berkshire Hathaway posted record fourth-quarter earnings this year and bought back $27 billion in stock over the whole of 2021. Since then, however, the billionaire cautioned that stock buybacks would slow considerably this year to just $1.2 billion, suggesting the Sage of Omaha may be tempted to put his $146.7 billion cash pile to work in finding more companies. Shares of the Pc and printer maker were marked 15.27% higher in pre-market trading to indicate an opening bell price of $40.24 each. The company, in the spring of 2020, beat back a $35 billion hostile takeover bid from Xerox (XRX) and has now added video and audio devices maker poly to its stable last month in a deal valued at $3.3 billion, including debt, as it looks to expand product offerings to take advantage of the global shift towards hybrid work.

President of the Federal Reserve Bank of Minneapolis, Neel Kashkari, stated Friday that the central bank must follow through on its rate-raising guidance and balance-sheet reduction plans, which have already caused higher borrowing costs in the longer term. “At a minimum, the [Federal Open Market Committee] must follow through on the forward guidance of federal funds rate increases and balance sheet reduction that we have already signaled in order to validate the repricing that has taken place in financial markets,” Mr. Kashkari said in an essay published by his bank on Friday.

Mr. Kashkari’s comments follow the FOMC’s meeting this week, during which officials raised their target rate by a half percentage point and signaled more similar actions to come. Additionally, the Fed stated that it would gradually reduce its balance sheet beginning in June. As a result of the Fed’s actions and possible future moves, the inflation level will be lowered to 2%. At present, Mr. Kashkari is not a voting member of the FOMC. The Fed’s easy money policies have generally supported him, but he has joined his colleagues in advocating rate increases to bring inflation back to more acceptable levels.

According to Bank of America CEO Brian Moynihan, U.S. consumers are “in good shape” and will continue to spend at a high clip, at least in the near term. “Consumers are in good shape, not overleveraged,” Moynihan, CEO of the second-biggest U.S. bank by assets, told Bloomberg Television from Davos, Switzerland. Meanwhile, the bank’s customers have checking and savings accounts that are still larger than before the pandemic and are spending 10% more so far in May than the year-earlier period, he said. “What’s going to slow them down? Nothing right now,” Moynihan said.

Meanwhile, the Federal Reserve is in the middle of an inflation-fighting campaign that has pummeled markets, especially formerly high-flying growth stocks. With inflation at multidecade highs and a central bank slamming the brakes on easy-money policies, there has been mounting concern the economy will fall into recession. Keeping the economy from falling into recession would be good for American consumers. “The Fed has this typically very difficult thing of getting them to slow down without slowing down too much,” Moynihan said. “I believe they are going to be able to manage this flow, but it’s going to be tricky.” According to Moynihan, more bank CEOs are optimistic that the U.S. can avoid a recession. However, earlier this month, JPMorgan Chase CEO Jamie Dimon put the odds at 66% that the U.S. will have some economic slowdown.

On Tuesday, JPMorgan Chase CEO Jamie Dimon received a rare rebuke following a shareholder vote opposing his massive retention bonus. An estimated 31% of shareholders who attended the New York-based bank’s annual shareholder meeting supported Dimon’s $52.6 million award as part of his 2021 compensation package. This bonus, which is in the form of 1.5 million options that Dimon can exercise in 2026, was designed to keep him at the helm of JPMorgan for another five years. A spokesman for the bank, Joe Evangelisti, stated that its estimated value varies and depends on the bank’s share price appreciation.

“The special award was extremely rare — the first in more than a decade for Mr. Dimon — and it reflected exemplary leadership and additional incentive for a successful leadership transition,” Evangelisti said. Although the results of this “say on pay” vote are not binding, JPMorgan’s board said it takes investor feedback “seriously” and intended Dimon’s bonus to be a one-time event. JPMorgan’s board suffered its first disapproval of a pay package since pay-watch measures were introduced more than a decade ago. Simon, 66, has led JPMorgan since 2006, guiding it through several crises and transforming it into the largest U.S. bank by assets.

As traders struggled to find their footing in an increasingly volatile market, the Dow Jones Industrial Average fell for the sixth consecutive day Thursday. The 30-stock Dow slid 103.81 points to 31,370.30, or 0.33%. The S&P 500 fell 0.13% to 3,930.08. The tech-heavy Nasdaq Composite yielded a small gain, closing up 0.06% at 11,370.96. The three major averages were on track for weekly losses. Earlier in the day, traders attempted to counteract a decline in the market by purchasing beaten-down stocks. The Dow had reached session highs as high as 80 points, while the Nasdaq had gained 1.61 percent. Dow Jones dropped more than 500 points at session lows, while the Nasdaq declined 2.25 percent.

A new low has been established for the S&P 500 for 2022, closing more than 18% below its 52-week high and moving closer to bear market territory. “Even if you say we’re in a bear market, there’s rallies within bear markets that can be very sharp,” said Truist’s Keith Lerner about the early market moves. “I think, at least short-term, and given how oversold we are and given that we’re starting to see people nibble at some of these areas that have been the most beaten up, I think that’s at least a silver lining in a sea of red and gloom over the last couple of days.” Only the Nasdaq is in the bear market territory after falling about 30% from its record high in terms of major averages. Technology stocks continue to be hammered.

In a new burst of selling in bonds, the 10-year Treasury yield rose well above 3% on Thursday, a day after Federal Reserve Chairman Jerome Powell appeared to calm markets by downplaying the possibilities of a rate hike in the near future. In the U.S. trading session, Treasury yields, which rose when bond prices declined, began climbing early and kept climbing. This contributed to sharp declines in the stock market, which had rallied earlier in the week. The decrease is the latest in a series of downward trends that have affected many assets, from relatively safe corporate bonds to speculative investments such as cryptocurrencies and shares in non-profitable technology companies.

The increasing yields on Treasury securities, which are heavily influenced by expectations regarding future Fed policy, increase borrowing costs throughout the economy. In addition, they may decrease the value that investors place on the future earnings of riskier stocks, thereby reducing their demand. Mohit Bajaj, director of ETF trading solutions at WallachBeth Capital, observed that as the bond crisis deepened, investors shifted from long-term corporate bonds and junk bonds to less risky forms of debt. SPDR Portfolio Long Term Corporate Bond ETF fell 2.7%, its worst one-day decline since the pandemic-induced market sell-off on March 19, 2020. The iShares High Yield Bond Factor ETF declined 1.9%, its worst one-day performance since June 11, 2020.