Disaster, Inc.

By Matthew Gutierrez and Shawn O'Malley · October 16, 2024

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Bank stocks are flying. The financial sector hit a fresh all-time high Wednesday and has outperformed the broader market this year.

Strong financial earnings (more below) helped power the S&P 500. Suddenly, 6,000 is within striking distance.

When accounting for reinvested dividends, the U.S. stock market has now been up over 70% since the index’s Oct 13, 2022 bottom of 3,492.

— Matthew & Shawn

Here’s today’s rundown:

Today, we'll discuss the biggest stories in markets:

• Wall Street banks post big profits
• Disaster, Inc. — the weather is bad, but the profits are good

This, and more, in just 5 minutes to read.

POP QUIZ

Which country’s stock market has posted the best performance so far this year? (Scroll to the bottom to find out!)

Chart(s) of the Day

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In The News

?? Wall Street Banks Post Big Profits to Kick Off Earnings

Folks, it’s been a nice week of earnings for big banks. Trading results and a rebound in investment banking have investors in the financial sector sitting pretty well.?

The latest beneficiary: Morgan Stanley, which just posted a record quarter in wealth management, one of Wall Street’s most profitable business units.?

Getting richer: Client assets at Charles Schwab and the wealth divisions of six large U.S. banks grew $5 trillion in the last 12 months through September, a 23% jump. The rising stock market elevated client balances and encouraged new customers to invest with firms. Some banks have attracted wealthy clients with welcome bonuses and new products.?

Strong tailwinds: The wealth management business is relatively consistent and requires less regulatory capital than other business units. It’s also very profitable. For instance, Morgan Stanley’s wealth unit recorded a 37% return on tangible equity in 2024, triple that of its investment banking arm.? (Tangible equity measures the efficiency with which a company operates and utilizes its tangible assets to generate long-term profits.)

• One analyst told clients Wednesday, “It is clear that the industry is benefiting from?strong tailwinds.”
• All big banks that reported in the past week reported strong gains, just as the S&P 500 climbed to new heights and interest rates were reduced for the first time in over four years.?

Morgan Stanley made $20.9 billion of wealth revenue in the first nine months of 2024, while Bank of America’s wealth revenue grew 18%.?Schwab said flows into its high-end wealth business grew 65% this.

“Our ultra-high-net-worth clients have been a particular area of focus,” Schwab’s CEO told analysts. The firm is also introducing a new alternative investment platform for wealthy clients with over $5 million in assets.?

Why it matters:

Continuously rising markets means people are richer than ever before, and wealth management is among the greatest beneficiaries.?

Millionaires make up over 1.5% of the adult population, per UBS. The number of U.S.-dollar millionaires could jump by 50% over the next five years. As more Americans grow wealthier, they become more...