Jim Cramer Says Bank Stocks Still Hard to Own Even After Strong Results

Investors are still hitting bank stocks even when earnings clear the bar, according to Jim Cramer. Morgan Stanley (MS) slipped almost 3% on Wednesday following a 12% revenue increase that topped forecasts.

The sell-off stems from worries about sticky inflation and rising rates, not weak fundamentals, Cramer says. Goldman Sachs also exceeded projections, yet it gave back another 1.5% on Wednesday, per CNBC.

Why Didn't Morgan Stanley's 12% Revenue Beat Lift Its Shares?

Morgan Stanley's third-quarter revenue came to $20.3 billion, up from $18.2 billion a year earlier, as detailed in its filing.

The Institutional Securities unit, which spans investment banking and sales and trading, grew 18% to $10 billion.

Fixed income disappointed against estimates, Cramer said, with the filing showing a 7% drop.

Wealth management, on the other hand, increased its revenue by 10%, and client assets in wealth and investment management hit a record $10.5 trillion.

Even with that, Morgan Stanley Chief Executive Ted Pick told CNBC he is cautiously optimistic about the fourth quarter, Cramer said.

“it’s not easy to own these bank stocks right now.”

Jim Cramer, host of CNBC's Mad Money, made the remarks on CNBC.

Cramer said Morgan Stanley also acts as a lead underwriter for Anthropic's IPO, which is slated for November.

Herman Chan, an analyst at Bloomberg Intelligence, says deal flow from Anthropic's IPO could give a lift to Morgan Stanley and Goldman Sachs.

Does Cramer Think a Resolution in Iran Could Revive Bank Stocks?

A resolution to the war in Iran, even an imperfect one, could cool inflation, according to Cramer.

That, in his view, would create room for the Federal Reserve to ease off on interest-rate increases.

If that scenario unfolds, capital markets would bounce back, he thinks.

In the meantime, his Charitable Trust portfolio raised Wells Fargo and Goldman Sachs to buy-equivalent ratings, CNBC reported.

These banks no longer behave as a single group, Cramer says, because each now has different traits.

Momei Qu, PSP Growth's head of venture, says Goldman Sachs and JPMorgan are turning into AI stocks. So far, their results do not reflect that link, she told Bloomberg.

Bank shares, then, could keep moving on inflation and interest-rate signals rather than on quarterly beats.