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Morgan Stanley stock pops after blowout earnings report

Javier E. David
Editor focused on markets and the economy

Morgan Stanley reported first quarter earnings on Wednesday that exceeded market expectations, with results boosted by strong performance in its wealth and investment management segments that sent the stock on a tear.

The global investment bank posted a profit of $1.39 per dilute share, which included a tax benefit that boosted results by 6 cents, compared to $1.45 in the comparable year ago quarter. Revenues were $10.3 billion, versus $11.1 billion in the first quarter of 2018.

On average, analysts expected Morgan Stanley to report earnings per share of $1.17 on revenues of $9.91 billion, according to Bloomberg.

Morgan Stanley’s stock, traded on the New York Stock Exchange, added more than 2% from Tuesday’s close, ending the session at $48.26.

“We delivered solid earnings despite a slow start to the year following the turbulent markets in the fourth quarter,” CEO James Gorman said, adding that the firm’s high returns “demonstrated the stability and breadth of our global franchise.”

Morgan Stanley CEO James Gorman is interviewed by Senior Correspondent Charlie Gasparino on the Fox Business Network, in New York, Friday, Jan. 18, 2013. Profits roared back at the investment bank Morgan Stanley in the fourth quarter, reversing a loss in the same period a year ago, when its results were weighed down by a costly legal settlement. (AP Photo/Richard Drew)

Since the current earnings season began, the banking sector has featured a mixed bag of reports. Most of the big firms have seen weaker trading and underwriting revenues when compared to a year ago, with the economy softening and the Federal Reserve’s interest rate campaign on hold for now.

As expected, sales and trading dropped from the comparable year-ago quarter, to $3.7 billion from $4.4 billion in the first quarter of 2018. Yet wealth management revenues ticked higher from last year, to $3.9 billion. Meanwhile, assets under management jumped to $480 billion, up from $469 billion.