The numbers were much worse than most analysts expected.

Either way, the results were substantially worse than what analysts were anticipating. Consensus estimates were for a loss of $298 million, or 34 cents a share, according to Thomson Reuters.

Just a month ago, analysts were widely expecting Morgan Stanley to report a narrow profit for the quarter. But they steadily lowered their earnings expectations for the firm given the ongoing volatility in the financial markets.

The quarter was almost universally bad for the company who lost across almost every segment they operated in. It’s also a bad year for Morgan Stanley employees, who will see their bonus pool halved.

Right now Morgan Stanley is looking to add deposits to its’ array of financial resources, because traditional sources have dried up. Yesterday rival Goldman Sachs announced a $2.1 billion quarterly loss. The tough times for Wall Street firms continues.

Questions are swirling concerning whether the White House will bail out the auto industry. Speculators think the action is inevitable, and that gave a slight boost to auto shares.

Goldman Sachs announced a $2.1 billion loss for the last quarter. It was the first time that Goldman lost money since going public in 1999.

It was the first losing quarter since Goldman went public in 1999 and demonstrates that even some of Wall Street’s most skilled operators have not been able to overcome historically tough markets and sagging economies across the globe.

Goldman sidestepped earlier losses by staying out of the high-risk subprime mortgage market and taking an early bet against the United States housing industry. But it has been unable to avoid taking big markdowns after nearly 30 percent declines across global equity markets in its fiscal fourth quarter, which ended in November.

The crows continue to come home to roost with bad investments hitting global balance sheets daily.

Morgan Stanley will be reporting earnings this week, and nobody expects less than a loss of $400 million for the quarter.

Record oil prices, the credit crunch and fears about the economy aren’t helping matters. There is still a lot of concern that subprime related writedowns at banks and other financial institutions will result in the worst profit decline for companies since 2002.

In wake of the declining markets, Moody’s has hinted at downgrading Morgan Stanley (Symbol: MS) to an A1 rating.

Moody’s senior vice president Peter Nerby said:
“Markets have clearly been challenging, but the firm has also incurred some expensive trading mishaps during the past year.”

Larger lending institutions were down at market close. Bank of America (NYSE:BAC) closed at $24.59; Lehman Bros. (NYSE:LEH) closed at $22.25.