Morgan Stanley Falls After SocGen Downgrades Shares to Sellby
Analysts cite severe cuts to fixed-income trading operations
Firm's shares drop to lowest level since October 2013
Morgan Stanley dropped in New York trading Wednesday after Societe Generale SA downgraded the stock to sell, citing the firm’s slumping profit and revenue from its bond-trading business.
Management “severely” cut the fixed-income, currency and commodities unit in the fourth quarter, which will drive a reduction in earnings from the investment bank, Societe Generale analysts said in the note.
Shares of the New York-based firm fell 4.3 percent to $27.24 at 12:55 p.m., reaching the lowest level since October 2013. Morgan Stanley has lost 14 percent since the start of the year. Goldman Sachs Group Inc. fell 2.4 percent Wednesday, to $161.69, and the Standard & Poor’s 500 Financials Index dropped 1.1 percent.
Morgan Stanley recently cut 1,200 workers worldwide, including about 470 traders and salespeople in its fixed-income and commodities business, a person familiar with the matter said in December. Colm Kelleher, who was promoted this month to president of the firm, said at a Nov. 17 investor conference that the fourth-quarter trading environment wasn’t much better than the third quarter, when Morgan Stanley posted a 42 percent plunge in fixed-income revenue.