Morgan Stanley Falls as Volatility Hits Dealmaking

By Geoffrey Smith

Investing.com -- Morgan Stanley (NYSE: MS) stock fell in premarket after the investment bank's third quarter earnings pointed to weakness in its core investment banking division due to global market volatility.

The bank's global advisory operations on mergers and acquisitions saw volumes fall 63% in the U.S., as the sharp rise in U.S. interest rates during the period complicated the task of raising money for buyouts.

Morgan Stanley is on the hook for what is set to be the biggest leveraged buyout of the year, having agreed to arrange and underwrite billions of dollars in loans to finance Elon Musk's acquisition of Twitter (NYSE: TWTR). Yields on non-investment-grade bonds have skyrocketed as the Federal Reserve has raised interest rates to tame inflation, leaving the bank with little chance of finding buyers for the bonds.

Morgan Stanley said third quarter earnings per share fell to $1.47 from $1.98 a year earlier, broadly in line with expectations despite a slight miss on revenue, which fell 12% from the previous three months to $13.0 billion. Overall profit fell to $2.49 billion from $3.58 billion a year earlier.

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