Shares of Morgan Stanley headed for a test of their July 2022 lows, and a fifth straight weekly dive, after the company reported a major drop in investment-banking revenue. Elsewhere, State Street climbed on its earnings beat.
Third-quarter results showed Morgan Stanley's earnings declines slowing for the third consecutive quarter, down 6% to $1.38 per share. Net revenue rose 2% to $13.27 billion. Analysts polled by FactSet expected earnings of $1.28 per share on $13.22 billion in revenue.
Investment banking revenues dropped 27% to $938 million while advisory revenues fell 35% to $449 million due to fewer merger & acquisition transactions. Total institutional securities revenue eased to $5.67 billion from $5.82 billion last year.
Wealth management revenue rose 5% to $6.4 billion, driven by higher asset management and transactional revenues.
Investment management revenue jumped 14% to $1.3 billion.
MS Stock
MS stock tumbled 6.8% Wednesday. Shares retreated the past three months after rising to late July highs of 95.57 following Morgan Stanley's Q2 earnings beat.
MS stock has fallen 11.9% year to date. It is a bit less than 3% above its low from July 2022.
State Street
Boston, Mass.-based investment manager State Street reported earnings up for the second consecutive quarter, increasing 6% to $1.93 per share adjusted. Revenue fell for the first time in three quarters, declining 9% to $2.69 billion.
FactSet analysts predicted earnings of $1.79 per share on $2.92 billion in revenue.
State Street noted revenue declined in part due to a $294 million loss on a sale as part of its investment portfolio repositioning strategy. The firm expects the repositioning to benefit net interest income in future periods.
Total fee revenue rose 3% to $2.36 billion while net interest income fell 5% to $624 million.
Investment servicing assets under custody and/or advisory (AUC/A) surged 12% to $40 trillion. Meanwhile, investment management assets under management jumped 13% to $3.7 trillion.
STT Stock
State Street stock climbed 2% Wednesday, attempting to break resistance at its 50-day moving average. STT shares rose during the last four trading days and are up nearly 6.8% on the week, MarketSmith data shows.
Still, State Street stock is down about 11.5% in 2023 after tumbling during the string of bank failures in the spring.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
