US Stock Market Stabilizes on Big Earnings Day

Tuesday is a big earnings day, with results from Bank of America and Morgan Stanley. Investors will also be watching for clues regarding the possibility of rate cuts in remarks that Federal Reserve Chair Jerome Powell is expected to make. Bond yields were little higher on Tuesday, and equities fluctuated between minor gains and losses, suggesting that the markets may be stabilizing.

Following the revelation of hotter-than-expected inflation statistics last week, both stocks and bonds have experienced a difficult period. Friday and Monday saw a 2.6% decline in the S&P 500, the worst two-day stretch since March 2023.

Treasury yields have increased in step with expectations that the Federal Reserve won’t reduce interest rates as much as anticipated. However, the yield on the 10-year note was just 4.65% as of late, down slightly from Monday’s high and below its intraday peak.

The Dow increased. Recently, the blue-chip index gained almost 150 points, or 0.4%. It was roughly flat for the Nasdaq and S&P 500.

Following the bank’s announcement of an improvement in investment banking, Morgan Stanley’s stock rose. The stock of Bank of America fell. Following its earnings release, UnitedHealth increased, contributing to the Dow’s rise.

As global markets caught up with the late-Monday U.S. selloff, overseas stocks began to sell off. The Shanghai Composite fell even though reports indicated that China’s economy expanded in the previous quarter. The day was the weakest for Europe’s Stoxx 600 index since July.

Revenue for Morgan Stanley’s wealth management sector increased significantly in the first quarter, exceeding forecasts and exhibiting a robust growth rate under new CEO Ted Pick. Surpassing analyst projections and Goldman Sachs Group Inc. traders’ earnings, the trading unit made $5.33 billion. Revenue from the wealth unit was $6.88 billion, beyond analysts’ projections. The division’s net new assets came to $95 billion, surpassing both the bank’s growth target and the total for the preceding two quarters.

Since taking over in January, Pick has had to persuade investors that he can maintain the growth rate set by his predecessor, turn around the investment bank he managed, and quicken the growth of its massive wealth management company. Even though the money management industry has been expanding gradually, executives are keen to take advantage of the potential reopening of the capital markets, which might lead to an increase in transactions, trades, and capital raising.

Among the largest US banks, Morgan Stanley’s stock has underperformed thus far this year; on $15.1 billion in revenue, the company earned $3.4 billion in earnings for the quarter. Revenue growth for the company exceeded 4%, despite a cap on spending growth of little over 2%. The equity return increased to 14.5%.

In contrast to projections of $2.33 billion, Morgan Stanley’s fixed-income trading division reported revenue of $2.49 billion. Revenue from equity was $2.84 billion, although it was surpassed by Goldman Sachs Group Inc.’s $3.31 billion equity haul during the same time.

Advisory fees on deals contributed $461 million, vs projections of $510 million. Revenue from equity underwriting increased to $430 million as bankers became more optimistic about the secondary market’s potential to open up when public listings and listings resumed.