Morgan Stanley just dropped its second-quarter earnings, confirming that Wall Street-style businesses like investment banking and trading are still in the doldrums. Profit fell 13% from one year ago, to $2.18 billion. That amounted to $1.24 per share, beating the $1.15 expected by analysts polled by FactSet. Revenue was about $13.5 billion, up 2% from a year ago. That beat the expected $13.02 billion. Investment banking revenue was about flat from a year ago at about $1.08 billion. Trading revenue fell 22%. The bank got some help from its wealth management business, where revenue rose 16%. The unit accounted for nearly 50% of total company revenue in the quarter.

The Swiss stock market ended on a buoyant note on Tuesday, gaining ground consistently after a marginally positive start.The benchmark SMI ended with a gain of 127.35 points or 1.16% at 11,103.55, after climbing to a high of 11,120.88. Novartis shares climbed about 4.65% after the company raised its full-year earnings guidance and mapped out the planned spin-off of its generic medicines division Sandoz for early in the fourth quarter. Richemont gained 2.65% and Lonza Group advanced 1.8%. UBS Group ended higher by 1.02%, while Partners Group, Geberit, Swiss Life Holding, Swiss Re, Sonova and Holcim gained 0.5 to 0.8%. Swisscom and Nestle ended lower by 0.76% and 0.34%, respectively. Logitech, Alcon and Zurich Insurance Group ended flat. In the Mid Price Index, Clariant, AMS, Adecco and Straumann Holding gained 2.1 to 2.5%. PSP Swiss Property, Dufry, Swiss Prime Site, Swatch Group, Tecan Group and Lindt & Spruengli ended higher by 1 to 1.7%. DocMorris drifted down 1.7%. SGS ended 1.03% down, while Bachem Holding and Belimo Holding lost 0.72% and 0.47%, respectively.

After struggling for direction till well past noon, European stocks climbed higher in the final hour of the session on Tuesday, with investors reacting positively to comments from ECB council member Klass Knot that the central bank might pause its tightening cycle sometime soon. The pan European Stoxx 600 advanced 0.62%. The U.K.'s FTSE 100 gained 0.64%, Germany's DAX climbed 0.35% and France's CAC 40 ended 0.38% up, while Switzerland's SMI ended higher by 1.16%. Among other markets in Europe, Austria, Belgium, Czech Republic, Finland, Greece, Iceland, Ireland, Norway, Poland, Portugal, Russia and Sweden ended higher. Netherlands and Spain edged up marginally. Turkiye closed weak, while Denmark ended flat. In the German market, Covestro rallied more than 5.5%. Zalando and Vonovia claimed 4.5% and 4.1%, respectively, and BASF gained 3.2%. Puma, Continental, Bayer, Fresenius Medical Care, Fresenius and Sartorius gained 1.5 to 2.6%. HeidelbergCement advanced about 1.1%. Siemens Healthineers, Deutsche Telekom, Porsche and Brenntag lost 1 to 2%. In Paris, Sanofi, Michelin, Capgemini, Publicis Groupe and BNP Paribas gained 1.5 to 2%. Bouygues, TotalEnergies, ArcelorMittal and Safran ended higher by 1 to 1.3%. Hermes International and L'Oreal both ended lower by about 1.4%. In the UK market, Ocado Group soared more than 16% early on in the session after first-half results revealed a return to underlying profit. However, the stock pared a substantial portion of its gains and ended just 5% up. Royal Mail surged nearly 5.5%. Taylor Wimpey, Persimmon, Barratt Developments, Hikma Pharmaceuticals, Johnson Matthey, ICP, Kingfisher and Carnival gained 3 to 5%.

Stocks extended recent gains Tuesday, with the major U.S. indexes boosted by banks and shares of artificial-intelligence related companies. The S&P 500 rose 0.7%, while the Dow Jones Industrial Average added 1.1%, about 367 points, and the Nasdaq Composite advanced 0.8%. The Dow extended a winning streak to seven days, closing at its highest level since April 2022. The Nasdaq is now 37% higher in 2023. Bank stocks rallied after earnings reports from bellwethers Bank of America and Morgan Stanley, among others. Morgan Stanley rose more than 6% after executives said client activity strengthened during the quarter, raising hopes for a return of deal-making activity that has been stalled by higher interest rates. Bank of America shares climbed 4.4% after it reported a 19% increase in net income from a year ago. Its consumer division grew revenues by 15%. Meanwhile, AI mania continued. Microsoft rose 4% after announcing plans for several new initiatives to sell AI-powered products to consumers and businesses. "We believe over the next three years over 50% of the Microsoft installed base will ultimately be on this AI functionality...which changes the game" for Chief Executive Satya Nadella and the company, wrote Wedbush Securities analyst Dan Ives. Microsoft's market capitalization rose by more than $100 billion. Shares of Nvidia, the S&P 500's best performer in 2023, rose 2.2%. Nvidia produces graphics chips used by companies that make AI-chat models. Information technology was the best-performing S&P 500 sector, followed by financials. Investors will get their next look at how companies fared in the second quarter Wednesday, with Tesla, Netflix and Goldman Sachs among the companies scheduled to report earnings.

The stock markets in Asia are mixed on Wednesday. While Tokyo (+0.8 per cent to 32,766 points) and Sydney (+0.6 per cent) are following Wall Street's positive lead, Shanghai (-0.3 per cent) and Hong Kong (-1.2 per cent) are still dominated by the disappointment over the lower-than-expected GDP growth in the second quarter at the beginning of the week.

U.S. Treasury yields ticked lower, with the yield on the benchmark 10-year bond falling to 3.788% from 3.796% Monday.

Citi raises Swatch target to CHF 310 (289) – Neutral
Citi lowers Gea target to EUR 46.40 (48.10) – Buy
UBS lowers Richemont target to CHF 180 (182) – Buy

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