Third-quarter earnings show a contrast between the two banks.
Goldman Sachs has taken a back seat to rival Morgan Stanley in recent years, but third-quarter results suggest that Goldman is poised to emerge from its competitor’s shadow.So far this year shares of both banks are running neck-and-neck: Goldman is off by 12%, while Morgan Stanley has shed 13%, including Wednesday’s 8% drop. Even with those losses, both banks’ stocks have fared better than the KBW Nasdaq Bank Index , which has lost a quarter of its value amid this year’s tumult in the sector.
Morgan Stanley, meanwhile, hasn’t done anything wrong, but it has investors wondering what comes next. The bank smartly reorganized its business to be more focused on wealth management, which is a more stable source of revenue than volatile businesses such as deal making and trading. Morgan Stanley also made some impressive acquisitions—E*Trade and Eaton Vance—to achieve this goal.
Despite the stark differences between the two banks, they both sounded equally optimistic about the future. Trading: Both banks have had to contend with a challenging trading environment when markets have been volatile, and savers can gain 5% just by putting cash in money markets.
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