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Global Volatility Impacts Companies’ 3Q15 Revenues

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Oct. 20 2015, Published 1:34 p.m. ET

Morgan Stanley reported lower-than-expected earnings of $0.48 per share

Morgan Stanley (MS) reported net revenue of $7.8 billion for the third quarter ended September 30, 2015, as against $8.9 billion a year ago. For the current quarter, net income stood at $1.0 billion, or $0.48 per diluted share, compared with net income of $1.7 billion, or $0.83 per diluted share, for the same period a year ago. With reported earnings much below the consensus estimate of $0.64, the stock has lost 4.8% as of October 19. It is down by 5.1% from a year ago as of October 19.

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James Gorman, the chair and chief executive officer of Morgan Stanley, said in a press release, “The volatility in global markets in the third quarter led to a difficult environment, impacting in particular our Fixed Income business and our Asia Merchant Banking business. The Firm benefited from the stability of the Wealth Management business, our ongoing leadership in Equities and the continued strength of our Investment Banking franchise. Our business model provides a steady foundation for the Firm as we navigate these challenging markets and focus intensely on addressing areas of underperformance.”

Fluctuating currency levels, the slowdown, and falling commodity prices have adversely impacted the broader market. The Financial Select Sector SPDR ETF (XLF) has lost 4.9% year-to-date as of October 19. After the release of earnings, financial stock BancorpSouth (BXS) has gained 0.04%, whereas M&T Bank (MTB), BBCN Bancorp (BBCN), and Zions Bancorporation (ZION) have lost 3.1%, 0.26%, and 0.89% as of October 19. The stock earnings have fallen short of Wall Street estimates.

With the stronger dollar, IBM reported earnings at $3.34 per share

Also, with the gloomy global climate and the stronger dollar, IBM (IBM) reported a revenue below the consensus estimate. The stock has lost more than 5.0% after reporting its earnings at $3.34 per share as of October 19. IBM has lost 8.6%, whereas the Technology Select Sector SPDR ETF (XLK) was up 8.9% from a year ago.

Equity earnings are likely to be adversely impacted by the sluggish economic climate in the third quarter of 2015. The strong dollar, weakening demand conditions, and the slowdown in global markets are influencing earnings this quarter.

In the next article, we’ll look at some housing numbers that were released in the US.

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