The Dow Jones Industrial Average (DJINDICES: ^DJI ) is all over the place this morning, staying in negative territory shortly after temporarily peeking into the green. Hard-hit banking stocks JPMorgan Chase (NYSE: JPM ) and Goldman Sachs (NYSE: GS ) may experience a lift later on, however, as Morgan Stanley (NYSE: MS ) reported stellar third-quarter earnings, beating estimates on both earnings and revenue.
Good news for Goldman?
Morgan Stanley nearly doubled its earnings from one year ago, reporting strong equity sales and trading activity. Investment banking was also a bright spot, and its wealth management division showed a pre-tax margin of 19%. Like Goldman and JPMorgan, Morgan Stanley experienced a drop in its fixed-income division, down from $1.5 billion in the year ago quarter to $835 million.
Still, while both Goldman and JPMorgan are in the red as the noon hour approaches, the former rose by more than 0.10% earlier, and JPMorgan has gained a bit, as well, though some news about a big real estate sale could help lift the latter as the day wears on.
A report from Bloomberg this morning notes that the big bank has agreed to sell 1 Chase Manhattan Plaza to Chinese entity Fosun International, for a cool $725 million -- a sum sure to put a grin on the faces of JPMorgan's investors.
Unfortunately, Goldman was hit with a downgrade from Susquehanna earlier today, giving the bank a $2-per-share price-target cut following its lackluster earnings announcement yesterday. Still, Morgan Stanley is Goldman's closest peer, and one of banking's most positive earnings report may help float Goldman's stock, as investors consider that, despite the dour outlook in the fixed-income section, overall profits can be maintained -- even enhanced. Time will tell whether Goldman investors see Morgan Stanley's earnings beat as a negative or a positive for Goldman.
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