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Morgan Stanley overtook arch-rival Goldman Sachs in equities trading in the third quarter for the first time since 2022, helping the investment bank’s profits jump by almost half.

Morgan Stanley said on Wednesday that net income for the three months to the end of September was $4.6bn, more than $1bn better than analysts had expected.

The core Wall Street businesses of investment banking and trading have powered forecast-beating results across America’s biggest banks.

Goldman, JPMorgan Chase, Bank of America, Citigroup and Wells Fargo have all surpassed expectations in the past two days on the strength of their investment banks.

In equities trading, Morgan Stanley generated revenues of $4.1bn, up 35 per cent from a year ago and ahead of the $3.7bn reported by Goldman on Tuesday.

Equities trading has been a key point of rivalry between the two investment banks, and this quarter marked the first time that Morgan Stanley had out-earned Goldman in the business since the final quarter of 2022. 

Morgan Stanley was traditionally the dominant force on Wall Street in stock trading.

But it ceded that position to Goldman after it sustained heavy losses tied to investment firm Archegos Capital Management, and it has made a concerted effort to regain its top position under chief executive Ted Pick, who took over from James Gorman at the start of 2024. 

“We’re trying to create a more durable business,” Morgan Stanley chief financial officer Sharon Yeshaya told the Financial Times.

“Part of that comes from the lending and the prime brokerage business associated with equities. And some of it comes from the relationships that we continue to build on the corporate side.”

Investment banking generated $2.1bn in revenues, a 44 per cent improvement on the same quarter last year, which was in line with Goldman.

Goldman reported a 43 per cent increase in investment banking revenues to $2.7bn on Tuesday, while JPMorgan could only manage more modest gains of 16 per cent to $2.6bn and Citigroup reported a 17 per cent rise to $1.2bn.

Yeshaya said the bank was at “record levels when you look at the pipeline and the backlog” of potential deals.

Morgan Stanley’s wealth management business also performed far better than expected, drawing in net new assets of $81bn in the quarter compared with the $67bn investors were looking for.

The figure is followed closely by investors as a gauge of the business’s growth trajectory, with Morgan Stanley’s revenues split relatively evenly between its investment bank and wealth management divisions.

Morgan Stanley’s earnings came on the same day as Bank of America, which also trounced expectations for its investment bank. BofA reported a 43 per cent rise in investment banking fees to just over $2bn. Analysts had only expected the business to bring in $1.6bn.

BofA also reported an 11 per cent rise in revenues in its markets division to $6.2bn, helping lift the bank’s profits by almost a quarter from a year ago to $8.5bn.

Morgan Stanley and BofA shares were both up more than 4 per cent in pre-market trading.

This article has been updated since publication to correct the revenue in BofA’s markets division.

A major redistricting case returning to the U.S. Supreme Court on Wednesday could not only determine the fate of the federal Voting Rights Act, but also unlock a path for Republicans to pick up a slew of additional congressional seats.

If the high court overturns the act’s Section 2 — a provision that bans racial discrimination in voting — GOP-controlled states could redraw at least 19 more voting districts for the House of Representatives in favor of Republicans, according to a recent report by the voting rights advocacy groups Black Voters Matter Fund and Fair Fight Action.

And depending on when the court rules in the case, known as Louisiana v. Callais, some number of the seats could be redistricted prior to next year’s midterm election.

The analysis comes as President Trump continues to lead a GOP push for new maps in Texas, Missouri, North Carolina and other states that could help Republicans preserve their slim House majority after the 2026 election.

The GOP effort could be bolstered by a Supreme Court ruling that eliminates longstanding Section 2 protections against the dilution of the collective power of racial minority voters.

Many of the landmark law’s supporters fear such an outcome after the conservative-majority court didn’t rule last term on the Louisiana case, and instead scheduled a rare second round of oral arguments, which is expected to focus on the constitutionality of Section 2’s redistricting requirements.

A ruling gutting Section 2 could have a cascading effect on congressional maps in mostly Southern states where Republicans either control both legislative chambers and the governor’s office or have a veto-proof majority in the legislature — and where voting is racially polarized, with Black voters tending to vote Democratic and white voters tending to vote Republican.

If mapmakers in those states are no longer required under Section 2 to draw districts where racial minority voters have a realistic opportunity of electing their preferred candidate, Louisiana, Florida, Georgia, Missouri, North Carolina and Texas could end up with fewer Democratic representatives in Congress. Alabama, Mississippi, South Carolina and Tennessee could lose all of theirs, the report finds.

As much as 30% of the Congressional Black Caucus and 11% of the Congressional Hispanic Caucus could also be lost.

It all leads to a possibility of Republicans cementing one-party control of the House for at least a generation, says Cliff Albright, co-founder and executive director of Black Voters Matter Fund.

Demonstrators hold signs and wear shirts for Black Voters Matter Fund outside the Supreme Court on Wednesday.

Claire Harbage/NPR

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Claire Harbage/NPR

“Part of the point that we’re trying to make with this report is that what happens in the South doesn’t just stay in the South,” Albright adds. “This racial gerrymandering has the ability to not just disempower, disenfranchise Black voters and to eliminate Black elected officials and Latino elected officials. What happens in these states impacts the entire country.”

How the Supreme Court overturning Section 2 could lead to a redistricting “free-for-all”

In the Louisiana case, a lower court ordered the state’s Republican-controlled legislature to draw a new congressional map after a group of Black voters sued under Section 2.

Section 2 “ensures all communities of color can still participate equally in the voting process and elect candidates who reflect their interests,” says Alanah Odoms, executive director of the American Civil Liberties Union of Louisiana, whose attorneys are helping to represent those Black voters. “And if communities of color are not able to do that, we stand to lose what I think most of us believe is so fundamental to our democracy, which is equal participation, equal opportunity.”

The court-ordered map, which was in effect for the 2024 election, led to Democrats picking up a second seat in Louisiana.

A group of self-described “non-African American” voters, led by Phillip Callais, has argued, however, that the race-based redistricting the court ordered to get in line with Section 2 is unconstitutional. Just as the Supreme Court ruled against race-based affirmative action at colleges and universities in 2023, they argue, the court should put an end to race-based political mapmaking under Section 2.

In seeking a rehearing in the Louisiana case, the Supreme Court asked all sides in the case to consider whether the state’s “intentional creation of a second majority-minority congressional district violates the Fourteenth or Fifteenth Amendments to the U.S. Constitution.”

In one of their latest briefs to the high court, Republican state officials in Louisiana now argue against using race “in any form” when redistricting.

And in a major shift from past administrations, the Justice Department under Trump agrees that Section 2’s protections against racial discrimination are no longer constitutional.

Two years ago, the Supreme Court rejected a similar argument by Alabama Republicans.

“The court could reaffirm the Voting Rights Act as it did in 2023 in Allen v. Milligan,” says Atiba Ellis, a professor and an associate dean at Case Western Reserve University’s law school. “But many observers — and I am one of them — have been concerned about the court becoming more and more cynical about race-conscious remedies to address longstanding civil rights wrongs. And this decision has the potential to be the tipping point where the court declares unconstitutional or heavily restricts the ability for Congress to create remedies that promote multiracial democracy.”

That kind of decision coming amid the ongoing mid-decade congressional redistricting war between Republicans and Democrats, Ellis adds, could set the stage for a true “free-for-all” — pointing also to the court’s 2019 ruling that partisan gerrymandering is not reviewable by federal courts.

“It is one thing for politicians on both sides of the aisle to use the power that they have to engage in unprecedented power grabs. But the most important check on those grabs has been the prevention of racial discrimination,” Ellis says about Section 2. “Absent the federal law that would prevent that discrimination, I think the consequences could be tremendous and could be felt for decades.”

The window of time to pass new congressional maps before the midterms is closing as state deadlines draw nearer. Louisiana’s top election official, Secretary of State Nancy Landry, has asked the Supreme Court to rule in this case by early January 2026 to avoid disrupting the state’s current schedule.

But the timing remains unclear for the Supreme Court, which usually releases decisions for major cases toward the end of its term in June.

The court has confirmed that it plans to discuss early next month if it will take up a North Dakota case about whether private individuals and groups — whose lawsuits have been the main way of enforcing Section 2 — can continue to sue. Republican state officials in Mississippi have also raised that issue in another redistricting case on direct appeal to the high court.

Edited by Benjamin Swasey

Two weeks into the government shutdown, the Trump administration has frozen or canceled nearly $28 billion that had been reserved for more than 200 projects primarily located in Democratic-led cities, congressional districts and states, according to an analysis by The New York Times.

Each of these infrastructure projects had received federal aid, sometimes after officials spent years pleading in Washington — only to see that money halted as President Trump has looked to punish Democrats over the course of the fiscal stalemate.

The Times conducted its analysis by examining federal funding records, which include details about the city and state where each grant recipient is based. The projects include new investments in clean energy, upgrades to the electric grid and fixes to the nation’s transportation infrastructure, primarily in Democratic strongholds, such as New York and California.

In some cases, recipients had started to receive portions of the federal aid, only to become casualties in a funding battle that has no end in sight.

Mr. Trump’s aides have offered a series of explanations for the administration’s decision to pause or terminate grants, claiming in some cases that the spending would have been wasteful or in conflict with the president’s priorities. Since returning to office, Mr. Trump has been particularly aggressive in cutting federal investments to combat climate change.

But the budgetary moves coincide with the president’s public pledges to use the shutdown to slash spending favored by Democrats. He has described the federal stoppage as an “unprecedented opportunity” to make some cuts permanent.

Many Democrats said that the announcements fit a broader pattern at the White House, where Mr. Trump has claimed vast authority to reprogram the nation’s budget, even though the Constitution gives that power to Congress.

In doing so, Democratic lawmakers said the result could harm their cities and states, upending work that would have helped residents regardless of their political party.

The White House did not respond to requests for comment.

New delays in transportation aid

So far, the administration has targeted essentially two broad tranches of federal aid. First, the White House has held up billions of dollars in previously approved transportation funding for New York and Chicago.

In New York, the administration stopped the delivery of about $18 billion in pledged investments for two major projects: the Second Avenue subway, which traverses the east side of Manhattan, and the Hudson River tunnel, which serves as the primary rail route through New York City and along the northeast corridor. Funding for the tunnel, in particular, came only after years of wrangling, as New York officials and their counterparts in New Jersey looked to repair a roughly 115-year-old passage from damage wrought by Hurricane Sandy while improving rail capacity.

In Chicago, the Trump administration said it paused about $2.1 billion in money pledged for the city’s own transit upgrades, including an extension of its rail system into the South Side. Groundbreaking was expected to begin in 2026 after years of work to shore up federal funding for the expansion.

In both cases, the White House said it was pausing the delivery of federal dollars so that it could review the cities’ contracting policies. The administration sought to determine if leaders had made construction-related decisions on the basis of race, diversity or inclusion.

The moves came at a moment when the president was at war with key leaders from those states. Mr. Trump has frequently attacked Representative Hakeem Jeffries and Senator Chuck Schumer, two New York Democrats who lead their party in the House and Senate, for refusing to bow to his demands on spending. The Transportation Department claimed that the two men were to blame for the slowdown in aid, since the agency could not complete its review quickly during the shutdown.

Separately, federal officials have repeatedly tried to withhold security and counterterrorism funding from New York, though the state won back some of the money.

Mr. Trump has similarly gone after Chicago and its Democratic mayor, Brandon Johnson, along with the Democratic governor of Illinois, JB Pritzker, saying this month that both should be jailed.

Deep cuts to energy funding

The Trump administration also moved to terminate another tranche of money outright. Two days into the shutdown, it announced it would end roughly $7.6 billion in previously approved grants for 223 energy-related projects in 16 states, 14 of which are led by Democrats. Those cuts were later expanded.

The cancellations were the latest attempt by Mr. Trump and his top aides to revoke climate- and infrastructure-related funding adopted under President Joseph R. Biden Jr., a series of actions that have been challenged in court. The Energy Department said that it made its decision because the projects were “not economically viable” or did not advance Mr. Trump’s energy policy agenda.

Many of the projects are located in Democratic-led congressional districts, prompting lawmakers to question in recent days if there might be political motivations behind the administration’s actions.

The cuts targeted a vast range of projects, including efforts to prevent power outages and modernize energy grids — a bipartisan goal — as well as investments in newer energy sources, like hydrogen. The Trump administration revoked its plan to provide up to $1.2 billion for the Alliance for Renewable Clean Hydrogen Energy Systems, known as ARCHES, which aimed to help develop a clean-burning power source for heavy-duty trucks, port operators and other major drivers of harmful emissions.

The Biden administration announced the award in 2023, nearly two years after Democrats and Republicans adopted a bipartisan package to improve the nation’s infrastructure.

More cuts to come

As the shutdown enters its third week, Mr. Trump and his aides have threatened additional cuts. The president in recent days has described the closure as an opportunity “handed to us on a silver platter” to lay off federal workers, slash federal agencies and reduce other funding, perhaps in permanent ways.

One potential target is Portland, Ore. Karoline Leavitt, the White House press secretary, signaled this month that the Trump administration could block some unspecified federal aid to the city, which is led by a Democrat, because of ongoing protests of the president’s immigration crackdown.