Invest3 publishersIndependently confirmed3 min readPublished
Wall Street profits jump 51% in the first half, nearly three times the rise in pay spending
New York's comptroller says Wall Street earned $45.9 billion before tax in the first half, up 51.3%, and could top $90 billion for the year. Pay spending rose 18.8% over the same months, Seoul Economic Daily reported, so a second record bonus year looks likely if deal fees hold.
The Investor · Invest desk
What happened
- The six-month profit already beats the $45.3 billion that New York City had forecast for the entire year.
- Global mergers and acquisitions totaled $2.8 trillion in the first half, more than in any other half-year on record.
- New York's securities industry paid out a record $49.2 billion in bonuses last year.
- DiNapoli expects this year's bonuses to beat last year's barring a major economic shock, after the city had forecast a drop of about 20%.
- New York City collected $7.8 billion in taxes from the securities industry in fiscal 2026, above its previous high of $6.9 billion in fiscal 2022.
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Why it matters
- cost Shareholders are getting a bigger share of the industry's take, because profit is growing well over twice as fast as spending on pay.
- constraint To reach $90 billion, the second half has to be nearly as strong as the first while rising borrowing costs weigh on the underwriting business that led the gain.
- exposure New York State gets 20.8% of its tax revenue from the securities industry, so a second-half slump in deal fees would hit the state budget directly.
Little of the first-half profit came from trading. Trading-related revenue was $40.3 billion, up 1.8% [18]. That is an increase of roughly $0.7 billion [30], set against $15.5 billion more in pretax profit than in the first half of 2025 [25]. DiNapoli still gave volatility a share of the credit. "Wall Street is having an unusually strong year, fueled by the artificial intelligence spending boom, an increase in mergers and acquisitions, and higher trading volumes driven by market volatility," he said [4]. According to The Daily Upside, the strongest lines were underwriting, account supervision and commissions, and commodities trading was the exception [5].
Pay costs are rising, or rather they are rising well behind the profit that pays for them. Member firms' spending on salaries, bonuses and stock compensation rose 18.8% in the first half [21], while profit rose 51.3% [1]. That puts profit growth at about 2.7 times pay growth [28]. Last year went the same way. Profit rose 30.4% to a record $65.1 billion [17]. Average pay including base salary rose 11.1% to $561,770 [7], and the average bonus rose 6% to $246,900 [20]. Bonus growth was about a fifth of profit growth [29].
If the second half repeats the first, the year clears $90 billion. That would be 38% above 2025 [27] and, by The Daily Upside's reckoning, above 2009 even after inflation [16]. Getting there takes $44.1 billion in the second half, about 4% less than the first [26]. Rates are the obvious obstacle. The 10-year Treasury yield recently hit its highest level since 2002, and markets expect at least one more rate hike at the end of the year [14]. The comptroller lists rising rates among its risks, along with geopolitical conflict and elevated prices [13].
A third path is that firms hand more of the gain to staff to keep them. The comptroller's figures show steady hiring. The city had a record 207,400 securities jobs last year [22], and about 5,300 more are expected this year [23], a 2.6% increase [31]. They do not show firms bidding up pay to hold people.
I expect pay to keep trailing profit. The pay bill should rise at something near the first half's 18.8%, and the bonus pool should set a record, with profit growing faster than both. The Daily Upside wrote that excitement about upcoming IPOs from Anthropic and OpenAI is likely to keep M&A activity strong [24]. The counter-case is concentration. The 10 largest S&P 500 companies make up 39% of the index [15], and the comptroller warned that AI's outsized share of the rally could amplify volatility [13]. The view is wrong if the tax withholding data due around March [9] show the average bonus rising as fast as profit.
New York's budgets depend on these payouts. The state took $26.3 billion in taxes from the securities industry in fiscal 2025-26, up 28.5% [10]. The city's take was roughly 9% of its total tax collections, according to The Daily Upside [12].
What to watch
- Tax withholding data due around March: an average bonus rising as fast as profit would undercut the case that pay is trailing the gain.
- Second-half results for NYSE member firms: anything below $44.1 billion means the year falls short of DiNapoli's $90 billion.
- Treasury yields and the expected year-end rate hike, set against the underwriting and advisory lines that carried the first half.