3 Takeaways From Morgan Stanley's Strong Second-Quarter Earnings Report
Morgan Stanley (NYSE: MS) posted another strong quarterly report last week, with stellar growth in both revenue (8%) and net income (10%). The second quarter was the first in which E*Trade and Eaton Vance were both on its books for the entirety of the period, and both are making contributions. And lower trading revenues for the firm were more than balanced out by stronger wealth and investment management activity.
Morgan Stanley has been a stellar value stock for months now, and it continues to perform. Here are three key takeaways for investors from the Q2 report.
Institutional securities revenue dropped by 13.5% year over year to $7 billion in the second quarter. This decline was largely driven by a reduction in fixed-income trading revenue, which was $1.7 billion in the quarter -- down from $3 billion in the same quarter last year. Fixed-income trading was impacted by lower bid-offer spreads, lower volatility, and tighter credit spreads. These spreads are related to the bid-ask spread, or the difference between the highest price a buyer will pay and the lowest price a seller will take. In times of market volatility, the bid-ask spread can widen, which benefits firms like Morgan Stanley that process these trades and profit from the difference between the two.
Source Fool.com
