By all accounts, Morgan Stanley (MS) was supposed to have a mediocre quarter. Wall St. was concerned it could be worse than that. Enough of the large financial companies had been damaged by write-offs for the period.
Following the example of Goldman Sachs (GS), Morgan posted a profit, and its numbers were close to the ones it posted last year. For many traders, that was a miracle.
The investment bank’s management decided it needed to get its numbers out before nervous investors pushed its shares any lower. For the day, MS shares fell 11% to a new 52-week low of $23.21. The firm faced another potential sell-off tomorrow.
MS income from continuing operations for the third quarter ended August 31 was $1,425 million, or $1.32 per share, compared with $1,474 million, or $1.38 per share, a year earlier. Net revenue rose 1 percent to $8.0 billion.
The firm was expected to report earnings of $.78 per share, according to a consensus compiled by Thomson Reuters.
While it will take another quarter or two of earnings from brokers and banks to show whether the worst of the credit crisis is over, poor reports from Goldman Sachs (GS) and Morgan Stanley (MS) could have taken the Dow down today by another 500 points.
Douglas A. McIntyre
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