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Morgan Stanley Becomes the First Major Bank to Miss Earnings

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Morgan Stanley (MS) became the first large financial institution to significantly disappoint. Earnings per share excluding DVA came in at 16c, a little more than half the 29c that was expected. Revenue declined sharply to $7 billion, a 24% plunge from a year ago and less than expectations. The company reported that they had to post $225 million in additional collateral after the Moody's downgrade. Their exposure to PIIGS countries was at $4.18b after $2.41b.

Morgan Stanley also reported that they are expecting to cut 700 jobs by the end of the year. Shares traded down 5% in the pre-market.

Verizon (VZ) earnings per share and revenue both came in higher than a year ago. The reported earnings per share of 64c came in line with analysts estimates. Quarterly revenue of $28.6 billion was also what analysts expected. VZ saw growth in their wireless postpaid sales at 888,000 vs the estimates of 724,000. However, the company lowered capital expenditure expectations for the full year compared to 2011. Shares traded down nearly 2% on the news.

Southwest (LUV) EPS of 36c beat the expected 32c. The airline reported that second quarter profit rose 42% year on year. Revenue rose 11.6% to $4.62 billion, topping the $4.59 billion that was expected. The average price of a flight rose 5% year to year to $150. Shares traded 4% higher on the news.

Union Pacific (UNP) reported earnings per share of $2.10 , better than the expected $1.97. Revenue rose 7% from a year ago to $5.2 billion. UNP noted a 2% decline in diesel price per gallon for the quarter. The company repurchased $415 million shares last quarter. The company's guidance was very tepid, noting that the global economic outlook has become "uncertain" and coal volume is a challenge. Shares traded higher by 1.5% pre-market.

Freeport-McMoRan (FCX) reported revenue and earnings per share that beat estimates. Earnings per share came in at 80c versus the 75c that was expected. Revenue declined to $4.48 billion from $5.8 billion from a year ago, but beat the expected $4.46 billion.

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POSITION:  No positions in stocks mentioned.