The backtest results show that MS has a 63.64% win rate and a 1.31% average return over 30 days following earnings beats, despite negative short-term returns. The 3-day and 10-day returns are slightly negative, indicating initial market hesitation, but the positive 30-day return and maximum return of 3.01% suggest a recovery and potential gain over the medium term. This pattern implies that investors might benefit from holding MS for at least a month after an earnings beat to capture the eventual positive price movement.

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The backtest results show that MS achieved a 100% win rate across 3-day, 10-day, and 30-day periods following an earnings miss, with returns increasing from 0.50% at 3 days to 8.68% at 30 days. This indicates a strong positive price reaction despite the earnings miss, with the maximum return reaching 12.38% after 56 days. The analysis suggests that the market may have priced in the miss or viewed it as a buying opportunity. Investors might consider holding MS shares post-earnings miss to capture potential rebound gains.

The backtest results show that the Capital Markets Industry experienced no significant impact following earnings beats, with a maximum return of only 0.56% on the event day. This suggests that earnings beats in this sector do not translate into meaningful price movements or sustained gains. Consequently, investors should be cautious about expecting strong market reactions or trading opportunities solely based on earnings beats within the Capital Markets Industry.

The backtest results show that earnings misses in the Capital Markets Industry had no significant impact, with a maximum return of only 2.90% observed 23 days after the event. This indicates that the industry’s stock prices are largely resilient or unaffected by earnings misses over the tested period.

The lack of notable price movement suggests that investors may have already priced in such earnings misses or that other factors dominate market reactions in this sector.

For investors, this implies limited trading opportunities based solely on earnings misses within the Capital Markets Industry.

The backtest reveals that Morgan Stanley's earnings beat positively impacted the Banks industry with sustained gains over 52 days, while Healthcare Services experienced a prolonged negative effect lasting 58 days. This divergence reflects investor rotation toward financials driven by improved profitability and confidence, at the expense of defensive sectors like Healthcare Services. The market overall showed a positive response, underscoring the significance of earnings surprises in shaping sector performance. Investors may consider overweighting Banks following such earnings beats while reducing exposure to Healthcare Services, capitalizing on sector rotation dynamics triggered by financial sector strength.

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The backtest reveals that Morgan Stanley's earnings miss leads to a positive market impact overall, with Independent Power Producers showing strong gains over 55 days, while Professional Services suffer significant declines over 29 days. This divergence reflects a shift in investor preference towards stable, cash-flow resilient sectors amid financial sector weakness. The results highlight how earnings misses can trigger sector rotation, benefiting defensive industries and penalizing those dependent on corporate spending. Investors may consider reallocating towards stable utility sectors like Independent Power Producers when facing similar earnings disappointments in financial firms.

Backtest MS Earnings Beat and Miss Expectations

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