Thursday's Headlines: Wall Street Worst Quarter since 2008

Bad news: Wall Street firms are suffering. The biggest Wall Street firms posted their worst quarter in both trading and investment banking since the depths of the financial crisis, reports Bloomberg.

J.P. Morgan, BofA, Citi, Morgan Stanley and Citi combined posted a 35 percent drop in revenue, while investment banking revenue fell 41 percent. Further, the S&P 500 dropped 14 percent during the period, the worst decline since the fourth quarter of 2008, while the Chicago Board Options Exchange Volatility Index-which measures the cost of buying insurance against drops in the S&P 500-surged 160 percent to its highest quarterly mark since the first three months of 2009.

Across the pond, Swiss giant UBS is facing similar shaky ground, The New York Times writes. The bank plans to shrink its investment banking unit, following a rogue trading scandal last month which cost the company $2.3 billion and the resignation of the bank's CEO.

Analysts worry that the future remains uncertain as the U.S. economy and European debt crisis combine with regulation challenges to create additional pressures. Bloomberg quoted Charles Peabody, a Portales Partners analyst. "The micro has caught up with the macro, and the strains of the financial system have hit these companies."

Other News:

MSSB continued to cut financial advisors, ending Q3 with 17,291 advisors-down 347 from Q2 and down 752 since January. [Investment News]

HSBC is interested in buying Turkey's Denizbank from Dexia, the first lender to founder with the European debt crisis. [Bloomberg]

$8.7 billion flowed into hedge funds in Q3. [WSJ]

E*Trade's Q3 profit surged on income-tax benefit and lower loan losses. [WSJ]

Former Rep. Alan Grayson (D-Fla.) is launching a hedge fund. [FinAlternatives]

Citi will pay SEC $285 million on mortgage-related fraud charges. [Reuters]