Morgan Stanley’s earnings drop on Wall Street slowdown

Morgan Stanley’s Q3 profits fell 9% from a year ago due to a decline in investment banking and trading revenue, indicating that Wall Street is still struggling to recover from a prolonged slump.

The bank’s stock fell by 8%, marking its largest single-day drop in over three years. Morgan Stanley’s performance placed it near the bottom of the big banks, trailing profit jumps reported by JPMorgan, Bank of America, Wells Fargo, and Citigroup.

Investment banking fees at Goldman Sachs, Bank of America, and Citigroup all rose from a year ago, while JPMorgan’s fees fell by 2.6%. Morgan Stanley’s revenue from trading stocks and bonds was also down by 4%.

Wealth and investment management units posted higher year-over-year profits but fell short of analyst expectations. CEO James Gorman, who announced plans to step down as leader in May, said the firm delivered solid results.

Before Wednesday’s results, Morgan Stanley’s stock had dropped by 5.5% year to date, outperforming all its peers except JPMorgan Chase and Wells Fargo. In the last three months, it has fallen 7%, a steeper decline than all its big-bank peers except for Citigroup.