Plunging profits at the two premier Wall Street investment banks sparked contrasting reactions from investors, who punished Goldman Sachs for a sharp fall in investment banking fees while rewarding Morgan Stanley’s push into more stable businesses.
The earnings further underscored the benefits of Morgan Stanley’s expansion into wealth and asset management under chief executive James Gorman. Goldman, however, remains heavily reliant on dealmaking and trading for its profits, businesses that are less valued by investors because of the unpredictable revenues.
Both Goldman and Morgan Stanley had investment banking fees fall almost 50 per cent, amid a dearth of mergers and new stock market listings. However, record wealth management revenues at Morgan Stanley helped to partly offset the declines.