Stocks today reacted lightly to the news that Morgan Stanley performed significantly worse than analysts had expected. The investment bank reported a loss of 57 cents per share with estimates expecting only an 8 cent loss on a per share basis.
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[li] [B]Morgan Stanley Disappoints Wall Street With Estimates[/B] [/li][li] [B]Wells Fargo Revenues Surge on Mortgage Refinancing[/B] [/li][/ul]
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[B]Stocks Confused on Conflicting Bank Results[/B]
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Stocks today reacted lightly to the news that [B]Morgan Stanley[/B] performed significantly worse than analysts had expected. The investment bank reported a loss of 57 cents per share with estimates expecting only an 8 cent loss on a per share basis. If that was not enough to stun Wall Street, the company decided to slash its quarterly dividend from 27 cents to 5 cents per share. When asked by an analyst from Friedman, Billings, Ramsey why the company decided to begin raising capital in the form of debt that is not guaranteed by the federal government, Morgan Stanley’s [B]CEO John mack[/B] stated that it had nothing to do with undermining the stipulations set forth by the TALF program. He then added that “I think it’s important to show that the unsecured market will reopen.” Despite this upbeat rhetoric, the stock plummeted 9%. Fortunately, [B]Wells Fargo[/B], second largest U.S. bank by market value, was able to shore-up a portion of the negative sentiment that may have been felt as a result of the Morgan Stanley news. Indeed, the San Francisco, California-based institution said that its first-quarter profits rose 53% as home owners refinanced their mortgages at unprecedented low rates.
[B]Dow 30 7886.57 -82.99 -1.04%[/B]
Dow stocks finished the day near opening levels in a day rollercoaster day that saw the index jump as much as 1.3%. Ultimately, the weight of poorly performing banks brough blue chips down as the threat of continued financial instability loomed over those hoping for a quick economic recovery.
[B]SPX 500 843.55 -6.53 -0.77%[/B]
Financials in the S&P 500 performed the worst, shedding a whopping 3.82% after Morgan Stanley stunned investors with the magnitude of its losses for the first quarter. Implied volatility on the index rose by .96 points, or 2.6%.
[B]NAS 100 1646.12 +2.27 +0.14%[/B]
The tech-laden NASDAQ performed the best throughout the day, gaining as much as 2.07% before bringing shot down by broad financial sentiment. Big movers today included Broadcom which surged 10% after rumors surfaced that Qualcomm would settle a lawusuit with the chip maker after four years of legal pursuits.
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