Banks Lead Selloff After Morgan Results
Stocks declined Wednesday as investors booed results from Morgan Stanley and a dismal outlook from economy gauge FedEx.
Oil slipped below $134 a barrel after the EIA reported that crude inventories shrunk by 1.2 million barrels last week, less than the 1.5 billion draw expected.
President Bush delivered a speech on energy, calling on Congress to lift a ban on offshore drilling.
Morgan Stanley reported its profit plunged 56 percentdespite $1.43 billion of pretax gains from asset sales. Revenue dropped in nearly every business. The results from the second-largest U.S. investment bank beat expectations but investors still hammered the stock -- and the banking sector -- amid concerns about the future.
The report is the third in this week's brokerage trilogy: Lehman Brothers on Monday reported a disappointing $2.8 billion loss. On Tuesday, Goldman Sachs , which has fared better than some of its rivals due to less exposure to the subprime mess, said its profit dropped 11 percent but beat expectations.
Lehman is still on the hot seat -- and the temperature is rising -- as the firm has come under increasing pressureto either put itself up for sale or dramatically slash its workforce.
(CNBC's Charlie Gasparino reports on the latest rumblings at Lehman Brothers. Click on the video at left.)
Goldman had rattled the market Tuesday, slashing its price targets and earnings forecasts for a slew of banks amid its projection that the credit crisis won't peak until next year.
Fifth Third Bancorp shares skidded after the regional bank announced that it would cut its dividend by 66 percentand raise additional capital.
Other regional banks also took a hit, including SunTrust and Regions Financial .
FedEx posted a loss that missed earnings estimatesand said that the environment for the next year would be difficult.
FedEx earnings are closely watched as a gauge of the economy as the packages it delivers represent sales from a wide variety of sectors.
Microsoft announced that it had purchased Navic Networks, a closely held television-advertising-technology company, but terms of the deal were not disclosed.
Activist investor Olivant has raised its stake in Swiss bank UBSto 2.5 percent, saying it had fully supported the recent rights issue. Olivant, headed by former UBS chief executive Luqman Arnold, said in April it had taken a 1.1 percent stake and called on the bank to reform and consider splitting up.
The Royal Bank of Scotland warned a steep selloff in stockscould be coming as central banks find their hands tied by inflation, the Telegraph reported.
Still to Come:
WEDNESDAY: Oil inventories; Fed's Yellen speaks
THURSDAY: Jobless claims; Philly Fed survey; leading indicators; natural gas inventories; Fed advisory panel meets to discuss credit-card regulation
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