Morgan Stanley (NYSE:MS) stock rose 2.73% on January 21. Shares have climbed 10.1% in 2019 so far. The stock is still down 23.9% year over year.
Morgan Stanley has received a bump from broader momentum in US markets. The bank released disappointing fourth-quarter results on January 17.
Profits missed analyst estimates at $0.80 per share compared to $0.89 projected. Revenue also dropped 10% from 2017 to $8.55 billion, which also missed analyst expectations.
Rough market conditions resulted in bad results in Morgan Stanley’s Wall Street trading and advisory and wealth management segments.
Institutional securities reported $3.84 billion in revenue which missed projections by almost $500 million. Wealth management declined 6% to $4.14 billion. This was especially disappointing considering its top competitors managed to post single-digit gains in what was a tough conclusion to the year for most financial institutions.
This report is particularly troubling considering the benefits of U.S. tax reform are set to wear off in 2019. Goldman Sachs has projected a significant drop in earnings growth for top U.S. companies.
Banks will feel the pinch this year. Morgan Stanley made it clear in its earnings call that it is open to pursuing wealth management acquisitions in 2019 and beyond.
The bank faces a challenging economic environment this year, but management is confident that it can meet growth goals. Investors should continue to be skeptical when it comes to top U.S. bank stock valuations right now. To top it off Morgan Stanley had an RSI of 59 as of close on January 21, indicating it is just outside of overbought territory in late January.
