Morgan Stanley profit plunges as trading revenue slumps

The company witnessed increasing strength in equity sales and trading. The firm rewarded Ted Pick for taking the equity business to the top spot globally by putting him in charge of all trading under Colm Kelleher. (N: GS), and J.P. Morgan Chase & Co (N: JPM) in reporting reduced revenue.

For more than a decade, the so-called wirehouses-Morgan Stanley, Merrill Lynch, Wells Fargo Advisors and UBS Wealth Management Americas-have been pushing more clients into flat-fee managed accounts, with charges typically set as a percentage of assets under management, and away from the traditional transaction-fee model.

Chief Financial Officer Jonathan Pruzan offered little hope the trading environment would improve anytime soon.

The drop in Morgan Stanley’s “transactional revenues” metric primarily reflected “losses related to investments associated with certain employee deferred compensation plans, lower level of new issue activity and lower commission revenues”, the company said in a statement.

Australia Reserve Bank board minutes, Commbank business sales index, imports of goods; U.S. housing starts September, New York Fed chief William Dudley and Fed governor Jerome Powell speak at New York Fed event, IAEA releases nuclear energy report. Dan Simkowitz was named by the bank, as its head of asset management.

Revenue per advisor was $922 million, down 6 percent from the second quarter and down 1 percent from a year ago. Exxon fell 1.8 per cent to $80.99 and Chevron fell 1.4 per cent to $90.03, the biggest drags on the S&P 500 and the Dow.

Morgan Stanley’s $1 billion missMorgan Stanley’s stock slumped by 5% today after the investment bank posted surprisingly weak third-quarter results this morning.

Morgan Stanley sank 5.7 percent after third-quarter earnings came in at $740 million, dropping more than 50 percent from the year-ago period on weak trading results. Mississippi has declined 7.57% since March 16, 2015 and is downtrending.

Earnings applicable to common shareholders fell to US$939 million, or 48 U.S. cents per share, from US$1.63 billion, or 83 United States cents per share, a year earlier. Excluding an accounting gain and legal expenses, profit was 42 cents a share, missing the 63-cent average estimate of 23 analysts surveyed by Bloomberg. Out of a total of 35 analysts polled, 17 rate Morgan Stanley stock a Buy, 17 suggest a Hold, and only one analyst recommends a Sell.

The wealth unit had net revenues of $3.6 billion in the most recent period, down 4% from past year and 6% sequentially. Revenues were up 42% year-on-year – compared to 27% at Bank of America and 23% at J.P. Morgan. “People are going to be focusing on earnings, but I think earnings will have more of an impact on individual names than the overall market”. The Wall Street consensus analyst EPS estimate is for $1.31, representing year over year contraction of 6.4 percent.

Data on United States homebuilder sentiment is due at 1000 ET (1400 GMT). Gross revenue of $3.87 billion is the Wall Street consensus.