Morgan Stanley's stock turns lower, after downbeat NII outlook for rest of the year

Morgan Stanley's stock turned lower in premarket trading, as a downbeat outlook for net interest income (NII) offset second-quarter profit, revenue and NII beats. Chief Financial Officer Jon Pruzan said on the post-earnings conference call, according to a transcript provided by FactSet, that third-quarter NII is expected to be "largely in line" with year-ago results, while the current FactSet NII consensus of $992 million implies 6.0% growth. He said current expectations for lower interest rates could potentially have "a more material impact in the fourth quarter." The FactSet Q4 NII consensus of $996 million implies a 0.7% increase. The stock was down 1.3% ahead of the open, reversing earlier gains of as much as 0.8%. Pruzan said the third quarter was off to a strong start, "we are cognizant of a summer slowdown and that conviction remains lackluster compared to this time last year," as uncertainties over global economic growth have increased, "which may impact confidence and activity levels. The stock has lost 8.0% over the past three months through Wednesday, while the SPDR Financial Select Sector ETF has gained 1.9% and the S&P 500 has tacked on 2.7%.

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