Yahoo Finance

Our top story today, we are watching shares of two top trending tickers on Yahoo Finance, Bank of America and Morgan Stanley, both out with second quarter results. Let's take a look at some of the highlights here and we're taking a look at this market action here beginning the day. The biggest mover that we're seeing right now, Morgan Stanley, as of right now, and then additionally, you've got Bank of America moving to the upside by about eight tenths of a percent. Let's just briefly hit on Bank of America, a few of the takeaways that I was able to peruse through this report and ultimately kind of pen down as some of the bullet points that investors may be thinking about this morning. Number one, looking at some of the year over year comparisons, even though you did get a beat on top and bottom expectations, there was an overall lower performance versus last year. Revenue, they did say was hit by some lower deposit balances. You also saw the provision for credit losses up annually and sequentially here. Now, that could mean that they're just kind of trying to get ahead of where they could see some weakening in the consumer. But ultimately, thinking about that consumer as well on the digital front, for all you Zelle users out there, you're powering some of these new records. Digital usage strengthening for the bank, new Zelle records here. They did note 22.6 million active users. That's up 11% and then ultimately, some sent and received 382 million transactions worth $115 billion. Both of those markers up 26% here, Shauna.

Yeah, I think the big mover, the big reason why we're seeing this reaction in Bank of America has everything to do with net interest income and where exactly Bank of America sees that going here for the remainder of the year. Because net interest income, when it comes to that, Bank of America is saying that they expected it to hit a trough here in the second quarter of the quarter, the second quarter. And then interest income will probably hit a trough here for 2024. And then looking ahead, the company is saying that net interest income on a fully taxable equivalent basis is probably going to climb to about 14 and a half billion in the fourth quarter. So some improvement down the line. I think that's giving Wall Street a bit of confidence and why we're seeing Bank of America shares up just over 1% here in early trade, or pre-market trading. Now let's flip over to Morgan Stanley because a different reaction going on there. You've got that bank under some pressure here following the results that we got out this morning. We're looking at losses of just around three and a half percent. The big reason for that is some of the weakness that we are seeing in the wealth management business. Revenue there missing expectations coming in at $6.79 billion. Now the bank has really been under a tremendous amount of pressure to show that it could keep some of the momentum alive within the wealth management business. It's going to be able to keep expanding. It's already market leading share that it does have here under their new CEO, Ted Pick. So some weakness there is a bit of a cost, some I guess, raising some red flags here for Wall Street. So why we're seeing that stock under a bit of pressure. Also the company here, provision for credit losses coming in more than expected. On the flip side though, there are some areas, some bright spots within this report. The top line there, trading and net interest income at least beating the streets expectations. So able to maybe cushion some of the fears that we are seeing play out on the street, but again, a lot of this movement that we are seeing in pre-market in direct reaction to this report is related to some of the weakness or I guess loss of momentum that Morgan Stanley is seeing within its wealth management arm.

Yeah, it ultimately seems like and kind of continuing trying to get the read on where the executive officers for both of these banks are kind of remarking on what they're seeing in the broader environment right now. Uh, Ted Pick, as we were talking about Morgan Stanley, the chief executive officer over at Morgan Stanley, really remarking on this as a strong quarter, improving capital markets environment, which is actually something that many of the banks that we've heard as a through line from many of the banks have performed well because of this stronger capital markets environment and equity markets as well, um, is something that's been a boon for many of the banks at this juncture. But just to come back to that figure that you were mentioning on the wealth management side here, uh, because that came in lighter than expectations. And ultimately here it was the equities and sales trading revenue that outpaced some of the expectations or estimates coming into this quarter. And so where they're able to retain some of the wealthier clients, some of those who are looking to kind of rely on the services of the larger banks. I think that's been one of the other common denominators that we've heard over the course of this earning season. At least for the financial services industry thus far.

Yeah, you're exactly right. We'll see where these two banks open here at the opening bell in just about 24 minutes from now.