Bank of America & Morgan Stanley higher after third quarter earnings beats

Core Insights - The article highlights the strong performance of Morgan Stanley and Bank of America, particularly in investment banking, with Morgan Stanley reporting a 44% increase in investment banking revenue and a 35% increase in equities trading [2][9]. Company Performance - Morgan Stanley's investment banking revenue surged by 44% during the quarter, driven by advisory fees from mergers and acquisitions and equity underwriting [2]. - Equities trading also saw a significant increase, up 35%, indicating robust market activity [2]. - Bank of America reported a similar positive outlook, noting increased certainty around trade and tariffs, contributing to a rise in potential activity in the third quarter [9]. M&A Environment - Morgan Stanley's CFO indicated that the firm is at the beginning of a favorable M&A environment, with a focus on organic growth rather than transformational deals [3][5]. - There is a significant amount of capital available for potential deals, but the current earnings are primarily driven by strategic transactions and IPOs, with private equity sponsors yet to fully engage [6][7]. - The recent largest go-private deal, where the Saudis acquired Electronic Arts for over $50 billion, is expected to generate substantial fees for advisory firms, although it will not impact the current quarter's results [10]. Market Outlook - There is optimism regarding future deal-making activity, particularly as lower interest rates may facilitate more M&A transactions, although opinions vary among financial institutions on the impact of these rates [11][12]. - The potential for increased activity from financial sponsors remains uncertain, as they need to manage exits from previous funds before deploying new capital [8].