Morgan Stanley Traders Push Industry Tally to Eight-Year High

Morgan Stanley rounded out Wall Street’s banner week for trading desks with a 24% first-quarter revenue surge, pushing the industry’s tally to the highest in eight years.

The firm, which owns the world’s biggest stock-trading shop, said that business posted a 20% jump in the first quarter, while its fixed-income revenue topped $2 billion for the first time since 2012. The bank didn’t fully sidestep the market volatility as firmwide revenue dropped 8%, driven by more than $1 billion of provisions and writedowns on loans and the markdown of an energy-related investment.

“Over the past two months, we have witnessed more market volatility, uncertainty and anxiety as a result of the devastating COVID-19 than at any time since the financial crisis,” Chief Executive Officer James Gorman said in a statement Thursday.

The firm said the pandemic and its effect on the economy may “adversely impact our future operating results, and the attainment of our financial targets.” Morgan Stanley’s stock, which lost 25% this year through Wednesday, fell 1.1% to $37.98 at 7:28 a.m. in early New York trading.

The outbreak of the coronavirus sparked wild price swings in stock and bond markets, a boon for Wall Street trading desks that became an island of prosperity as the pandemic attacked other businesses. The top five trading firms generated a combined $27 billion in revenue, rebounding from years of low volatility that kept trading operations underperforming.

Every firm posted a more-than 20% jump from a year earlier, with JPMorgan Chase & Co. generating record revenue and Citigroup Inc. posting a 39% surge even as many traders spent the final weeks of the quarter working from home.

The gains at Morgan Stanley showed its traders can still be counted on to help boost results even as the firm shifts more of its focus and resources to managing money. That operation had an 8% drop in revenue.

Gorman, 61, said last week that he tested positive for the coronavirus in March and had informed the board. He was never hospitalized and continued to run the bank while quarantined. Morgan Stanley didn’t disclose the diagnosis until the CEO had recovered and been cleared by his doctors.

Gorman made expanding in wealth management his top priority in the years following the financial crisis. In February, the firm unveiled plans to purchase E*Trade Financial Corp. as Gorman turned to acquisitions to speed up Morgan Stanley’s makeover.

It was the industry’s biggest takeover since the 2008 financial crisis, but the timing was particularly unlucky: The day of the announcement marked the start of a historic slide in the S&P 500 index that at one point erased a third of its value.

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