Quick, what’s the worst-performing big U.S. financial stock over the past week of market madness? Must be Bank of America, right, and their giant edifice of busted mortgages? Nope.
The correct answer is: Morgan Stanley.
- Associated Press
Shares of the Wall Street investment house are down about 14% from the close of Friday trading until now.
Bank of America is nipping at its heels with an 11% decline over the same period, a stretch during which CEO Brian Moynihan at least three times sought to erase investor frown lines over BofA’s balance sheet.
(UPDATE: At the close, Morgan Stanley dropped nearly 16% this week; Bank of America was off 12%. The Dow managed just a 1.5% decline.)
So why Morgan Stanley?
First off, let’s not read too much into just five days of trading. There’s not tons of logic in the market ups and downs we’ve seen this week, driven by robots, rumors and panic.
But Morgan Stanley did take some flack for offering quite dire language about the potential harm to its business from the S&P downgrade of the U.S.’s credit rating last week. (Was it really only a week ago? Doesn’t it feel like ages?) Morgan Stanley wrote in its quarterly financial report that the U.S. downgrade could lead to a “material adverse effect” on the firm’s “business, financial condition and liquidity.”
It may have just been lawyerly boilerplate, but eek. In an interview with our Deal Journal colleague Aaron Lucchetti, Sanford Bernstein & Co. analyst Brad Hintz said Morgan Stanley “shot themselves in the foot” on the legal wording in the filing. He said the language overstated the problems Morgan would have with the S&P downgrade.
Morgan Stanley’s stock price also had a rally after a strong second-quarter earnings report last month, so it’s possible all the pent-up Morgan Stanley bullishness was satisfied then.
And then again, it could be the algo-trading robots just don’t like CEO James Gorman’s Aussie accent. It’s been that kind of illogical week.
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