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Preferreds dip amid S&P rebalance; Morgan Stanley posts lower profit but beats estimates
By Stephanie N. Rotondo
Phoenix, Jan. 17 - Preferred stocks fell Friday after "probably being up a couple cents for most of the day," a market source said.
The source noted that the S&P U.S. Preferred Stock index was scheduled to rebalance at the end of business, which he attributed as the cause of the downward move.
The Wells Fargo Hybrid and Preferred Securities index ended down 13 basis points.
However, liquidity was muted amid mixed earnings from Morgan Stanley Co. Inc. and General Electric Capital Corp.
As for Morgan Stanley, the company reported a dip in profit, but a source said the numbers were "decent." Still, the preferreds ended the session mixed, due in part to the index rebalance.
The 7.125% series E fixed-to-floating rate noncumulative preferreds (NYSE: MSPE) fell 2 cents to $26.34, while the 6.875% series F fixed-to-floating rate noncumulative preferreds (NYSE: MSPF) earned 11 cents to close at $25.48.
Both of those issues were being added to the S&P index.
The 6.45% capital securities (NYSE: MSK) meantime finished up 19 cents at $24.86.
For the fourth quarter, the bank reported net profit of $133 million, or 7 cents per share, versus $568 million, or 29 cents per share, the year before. Excluding certain items - including $1.2 billion in legal fees - earnings per share was 50 cents.
Despite the lower profit, the figure beat expectations. Analysts polled by Thomson Reuters were expecting a profit of 45 cents per share.
The bank's retail brokerage unit made $3.73 billion, better than the previous year's $3.33 billion. The investment management side of the business saw its revenues climb 41% to $842 million.
However, bond trading revenue declined 14% to $694 million.
On the equity side, revenues increased to $1.5 billion from $1.4 billion and equity underwriting increased 75% to $416 million.
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