Instant View: Morgan Stanley earnings plunge

NEW YORK (Reuters) - Morgan Stanley (MS.N) on Wednesday said quarterly earnings plunged as the ongoing credit crunch slowed investment banking and fueled trading losses, despite $1.43 billion of one-time asset sale gains.

The second-largest U.S. investment bank reported income from continuing operations of $1.03 billion, or 95 cents a share, for the fiscal second quarter ended May 30, down from $2.58 billion, or $2.45 a share, a year earlier.

Morgan Stanley shares fell 1.9 percent in premarket electronic trading.

The following is reaction from industry analysts and investors:

DANIELLE SCHEMBRI, FIXED INCOME ANALYST, BNP PARIBAS

"I can't say I'm really surprised."

"There are a lot of charges scattered through the results."

"The fixed income looked very lackluster."

"The one good trend I pulled from broker earnings is that client activity is strong across the board, which is good for financials."

PETER KENNY, MANAGING DIRECTOR AT KNIGHT EQUITY MARKETS IN

JERSEY CITY, NEW JERSEY.

"I don't think the Morgan Stanley numbers were bad news at all, the results are mundane but it's a welcome mundane. There didn't appear to be anything shocking in there at first look. We're only seeing a small decline in the shares -- we've seen a lot worse in the past few months.

BEN WALLACE, SECURITIES ANALYST, GRIMES & COMPANY

"It seems like it's generally par for the course."

"The big decline is in fixed income, which is what you'd expect."

"We have pretty good confidence in what they do."

MATT MCCORMICK, A STOCK ANALYST AT BAHL & GAYNOR INVESTMENT

COUNSEL, INC, CINCINNATI

"They made about $700 million from selling a Spanish wealth management business. If you have to go all the way to Spain to make numbers, it's not good. How many more rabbits do they have in their hat? What's going to be the driver of earnings growth going forward?"

(Reporting by Dan Wilchins, Kristina Cooke and Elinor Comlay)