Morgan Stanley’s stock fell 1% Friday in morning trading, after the bank’s first-quarter earnings topped consensus estimates thanks to a record performance in stock trading that some analysts fear may not be sustained.
The stock, like those of its big bank peers, has been volatile in recent sessions as President Donald Trump’s tariffs have created unprecedented U.S. market turmoil. The stock has fallen 16% in 2025, while the S&P 500
SPX +1.81% has fallen 10%.
Brian Mulberry, client portfolio manager at Zacks Investment Management with $20.4 billion of assets under management, said the 45% increase in equities trading to a record $4.1 billion was much higher than expected.
Combined with net new assets in wealth management of $94 billion, which helped drive revenue comfortably above consensus.
However, “The recent market volatility could impact both these segments in the short term as markets have lost 15-20% of value amid uncertainty in trade, tariffs and taxes,” Mulberry said in emailed comments.
“There is still time to recover in the current quarter, but we will be paying close attention to see if the asset flows and trading volumes continue to add growth in this difficult time.”
Morgan Stanley
MS +1.44% posted net income of $4.3 billion, or $2.60 a share, for the quarter, up from $3.4 billion, or $2.02 a share, in the year-earlier period. Revenue rose to $17.7 billion from $15.1 billion a year ago.
The FactSet consensus was for EPS of $2.21 and revenue of $16.5 billion.
“Institutional Securities strong performance was led by our Markets business,” Chief Executive Ted Pick said in prepared remarks.
Revenue at the institutional securities business rose to $8.9 billion from $7 billion a year ago, ahead of the $7.8 billion FactSet consensus. Equity trading rose from $2.8 billion a year ago, boosted by strength in Asia.
Fixed-income net revenue rose to $2.6 billion from $2.5 billion a year ago, boosted by foreign-exchange gains in a more volatile trading environment.
Investment-banking revenue rose to $1.6 billion from $1.4 billion a year ago, matching the FactSet consensus. Revenue was boosted by strong fixed-income underwriting that offset a decline in equity underwriting owing to a dearth of deals.
In wealth management, revenue rose to $7.3 billion from $6.9 billion a year ago, reflecting strength in asset management and higher levels of client activity. The FactSet consensus was for revenue of $7.4 billion.
The business added $94 billion in net new assets, while fee-based asset flows rose to $29.8 billion from $26.2 billion a year ago.
In investment management, revenue rose to $1.6 billion from $1.4 billion, ahead of the $1.5 billion FactSet consensus, as average assets under management rose to $1.7 trillion from $1.5 trillion a year ago.
The bank set aside $135 million in loan-loss reserves after a drawdown of $6 million a year ago.
On a call with analysts, Pick acknowledged the “less predictable” outlook in the current “adjustment period.” Other bank chiefs have also addressed Trump’s tariffs and trade wars in their earnings Friday, which they agree have introduced deep uncertainty to markets and the economy.
The stock, bond and currency markets are exhibiting the kind of overnight and intraday volatility that reflect rapidly changing probability assessments of different policy outcomes,” Pick said, according to a FactSet transcript.
The simple truth is: “we do not yet know where trade policy will settle, nor do we know what the actual transmission effects will be on the real economy,” he said.
As a result, some of the bank’s clients are “deferring strategic activity” while others are pushing ahead, he said.
Overall, Pick is not expecting the economy to go into recession, and believes clients have hit the pause button, but not the delete button, he said.
Chief Financial Officer Sharon Yeshaya said the company’s pipelines have not meaningfully changed since the start of the year and remain robust.
But the timing of deal execution “remains sensitive to market conditions,” while demand for strategic advice and capital raising is still there.