Waiting for Tesla, Investors Are Watching These 2 Stocks Wednesday

The stock market hasn’t seen many big moves this week, with investors seemingly waiting for market-moving news to take a stand on whether the bear market is truly over. After finishing nearly unchanged on Tuesday, futures contracts on major market benchmarks were mostly lower on Wednesday morning, dropping as much as two-thirds of a percent in premarket trading.

Many investors are waiting anxiously to see the latest results from electric vehicle manufacturer Tesla later this afternoon. In the meantime, though, several other stocks have reported their latest financial results. Below, you’ll see why ASML (ASML 0.67%) and Morgan Stanley (MS 0.63%) are getting a lot of attention from Wall Street Wednesday morning.

A chip on ASML’s shoulder

Shares of ASML were down 2.5% in premarket trading on Wednesday. The Netherlands-based semiconductor equipment  manufacturer released first-quarter financial results that featured massive gains, but investors seemed disappointed not to have seen even more from the company.

ASML’s numbers recovered dramatically from the semiconductor equipment maker’s year-earlier slump. Total revenue jumped 91% to 6.75 billion euros, as net system sales more than doubled. Net income of 1.96 billion euros came close to tripling year over year, producing earnings of 4.95 euros per share.

In general, ASML was upbeat about its business. Trends in electronics and the need for ever-smaller chips are driving demand for its lithography-related products and services, and ASML is hopeful that it can continue to boost its gross margin and generate as much as 60 billion euros in annual revenue by 2030.

In the near term, though, investors still have concerns that the semiconductor chipmakers that are ASML’s customers will need to cut production in order to deal with high supplies in certain corners of the market. That mimics closely what many other sectors of the stock market are seeing right now, as recession fears have caused investors to be cautious even though signs of a slowdown haven’t yet become obvious.

Morgan Stanley deals with bear-market conditions

Continuing the string of financial institutions reporting their latest financials, Morgan Stanley’s stock fell between 2% and 3% in premarket trading Wednesday morning. The Wall Street stalwart reported first-quarter results that were strong in some areas but reflected tough conditions in other parts of the market.

Overall, Morgan Stanley’s key results weren’t as good as some had hoped. Revenue fell 2% year over year to $14.5 billion, with the Wall Street institution pointing to the volatile market environment in explaining the decline. Net income dropped a steeper 19% to $2.98 billion, with earnings weighing in at $1.70 per share.

There were some bright spots in the report, however. Morgan Stanley’s wealth management business stood out with double-digit-percentage revenue gains, even as client asset levels fell due to adverse market moves. Accounting for those moves, Morgan Stanley pulled in nearly $110 billion in net new assets. The gains in wealth management helped to offset steep drops in revenue from investment banking as well as equity and fixed income trading activity.

Many banking institutions that rely more on corporate strategic moves than on consumer loans and deposits have struggled during 2022’s bear market, as conditions aren’t ideal for clients to seek to do deals or make other major financial decisions. Once markets start to improve, though, Morgan Stanley should be in a good place to capture rising demand as it returns.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML and Tesla. The Motley Fool has a disclosure policy.