Wall St. is selling off Morgan Stanley (MS) before the open on weak earnings. Shares are down over 3%

MS reported income from continuing operations for the second quarter ended May 31, 2008 of $1.026 billion, or $0.95 per diluted share, compared with $2.363 billion, or $2.24 per diluted share, in the second quarter of last year.

Net revenues were $6.5 billion, 38 percent below last year’s second quarter. Non-interest expenses of $5.1 billion, including severance expense of approximately $245 million related to staff reductions^.

Equity sales and trading net revenues of $2.1 billion decreased 11 percent from last year’s second quarter

Fixed income sales and trading net revenues were $414 million, down 85 percent from last year’s second quarter primarily reflecting lower revenues in interest rate, credit & currency products and commodities, and net losses of $436 million in mortgage proprietary trading.

Investment banking delivered revenues of $875 million, down 49 percent from last year’s second quarter.

Listen to the earnings call here.

Douglas A. McIntyre