Morgan Stanley puts pressure on Goldman Sachs to deliver
While Morgan Stanley's results weren't exactly great, they topped forecasts. And CEO James Gorman gave a solid enough outlook to excite Wall Street.
Morgan Stanley’s earnings were down 14% from a year ago. Investment banking revenue fell 13% from the first quarter and trading revenue tumbled 15% sequentially. Typically, investors aren’t too thrilled to see declines in the mid-teens for major financial metrics.
But Morgan Stanley’s results weren’t as awful as expected. What’s more, CEO James Gorman, who announced in May that he is planning to step down within the next year, sounded upbeat about the rest of 2023 and beyond. Gorman said during a conference call with analysts that improvements in some parts of the business towards the end of the quarter was “promising.”
Shares of Morgan Stanley surged nearly 7% on the news. It’s the “less bad” phenomenon. Investors were fearing even worse numbers given the recent spike in interest rates and concerns about inflation. Two other top financials, Bank of America and Charles Schwab, also topped forecasts Tuesday after the bar was set fairly low. Banking behemoth JPMorgan Chase also beat expectations last Friday.
All of that puts more pressure on Goldman Sachs, the king of Wall Street, to also top diminished expectations and give decent guidance about the economy and state of dealmaking. The stock is lagging its peers and the broader market over the past year. And with rumors swirling about the fate of CEO David Solomon possibly hanging in the balance, the so-called Vampire Squid needs to put up some solid numbers.