Morgan Stanley fell to a three-month low after reporting the biggest drop in trading revenue among the largest US banks.
Shares of the company slumped 5.4 percent, to $20.31, the biggest decline on the 81-company S&P 500 index. Bond-trading revenue fell 42 percent in the first quarter and stock-trading revenue declined 19 percent, Morgan Stanley said yesterday.
The drop in fixed-income revenue was the third in the past four quarters, and offset the company’s record first-quarter pretax profit from the brokerage unit. Goldman Sachs Group reported a decline of 9 percent in bond-trading revenue earlier this week, compared with a 3 percent drop at Citigroup.
“The fixed-income rebuild hasn’t worked as well as they had hoped,” said JMP analyst David Trone.
“They want to be more of an asset-gathering institution that also does investment banking and a little bit of trading.”