Updated from 9:48 a.m. EDTMorgan Stanley ( MS) reported a worse-than-expected first-quarter loss of 57 cents per share and cut its quarterly dividend 81% to preserve capital. The net loss applicable to common shareholders of 57 cents a share compares to a profit of $1.26 a share a year ago. Analysts polled by Thomson Reuters had predicted a loss of 8 cents a share. The company slashed its quarterly dividend to 5 cents a share, from 27 cents previously. The move allows the company to retain an additional $1 billion in common equity annually, it said. As anticipated, an accounting oddity caused Morgan Stanley to take an earnings hit from a rise in the price of its bond obligations. The firm also said it was hurt by declines in the market for commercial real estate. Morgan Stanley rival Goldman Sachs ( GS) beat expectations with a profit of $3.39 a share last week. Both companies reported strong gains related to fixed income trading, as did several banks, including JPMorgan ( JPM), Bank of America ( BAC) and Citigroup ( C). A large portion of the gain looks to come from banks acting as middlemen, capitalizing on increased trading activity and higher "spreads" -- the difference between what a buyer will pay and a seller will offer for a particular bond, according to Tim Sangston, fixed-income consultant at Greenwich Associates. "It's kind of a double whammy, where volumes are up, and the quality of the volumes are improving from the dealers' point of view," Sangston says. Morgan Stanley shares were down 2.6% to $24.02 in recent trading.