Stock Preview: Goldman to buy now

Morgan Stanley shares jumped 8.6% to $27.36 in morning trading Wednesday, while Goldman shares rose 43 cents to $149.34.

Goldman (GS 148.10, -0.81, -0.54%) said Tuesday that its equity-trading operations generated net revenue of $235 million in the second quarter. That was down 84% from the first quarter. The drop was partly caused by the firm's inability to hedge against a spike in stock-market volatility.

What’s more, Goldman’s employees are on track for what could still turn out to be a very good year. Goldman has set aside $9.3 billion for bonuses and other compensation so far this year — down 18 percent from the first half of 2009 — but enough to equal more than $500,000 per employee at the firm, which has a work force of 34,100.

Goldman’s traders have long aroused envy across Wall Street for their ability to prosper in markets good and bad, but they lost the Midas touch in the spring, especially when it came to trading stocks. As clients bet on rising volatility, Goldman took the other side of the trade, leaving it on the losing end when volatility did in fact surge.