Morgan Stanley's third quarter profits plunged as trading revenue slumped amid concerns about interest rates and China. Jeanne Yurman reports.
Weak trading slammed Morgan Stanley's bottom line. Its quarterly profit sank more than forty percent, falling far short of Wall Street forecasts. Investors sent the shares down nearly seven percent at the session's low. CEO James Gorman blamed especially weak bond trading - one of its worst quarters, he said, since the financial crisis. Morgan Stanley has been shifting its business to a less volatile segment: wealth management. But even that was weak says Reuters reporter, Olivia Oran. (SOUNDBITE) OLIVIA ORAN, REUTERS REPORTER (ENGLISH) SAYING: "This quarter there was just a ton of volatility. A lot of the products that had difficulty are areas that Morgan Stanley focuses on, specifically credit and rates trading. So, you know that's part of the reason why there was a big miss this quarter." Morgan Stanley joins other major U.S. banks this earnings season - all hurting from battered trading revenue. Investors have been fleeing the bond, currency and commodity markets with the timing of a U.S. interest rate hike becoming murky amid weaker economic data. And the health of China's economy - the world's second largest - is in question. Morgan Stanley and JPMorgan Chase say these issues have extended into the fourth quarter too suggesting ongoing headwinds for the banking sector in the final stretch of 2015.