Greed isn't good: Brokerage stocks have sliightly underperformed the broader market.

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NEW YORK (CNN/Money) - Morgan Stanley investors cheered the news that besieged chief executive Philip Purcell would be stepping down next March. Shares shot up nearly 2.5 percent Monday.

But Wall Street either failed to notice, or didn't care about, the other bit of big news from the company Monday.

The investment bank said that fiscal second-quarter earnings would probably come in between 88 cents a share and 94 cents a share, well below the $1.08 a share that analysts were expecting. Morgan Stanley (Research) cited "weakened market conditions" for its earnings miss.

That might not bode well for other big brokerage firms that report earnings this week: Lehman Brothers (Research), Bear Stearns (Research), Goldman Sachs (Research) and the newly public Lazard (Research).

But shares of Lehman, Bear Stearns and Goldman were relatively unchanged Monday. So were shares of brokerage Merrill Lynch (Research), which won't report its latest results until July. And the stocks of several banks with sizable brokerage businesses – Citigroup (Research), J.P. Morgan Chase (Research) and Bank of America (Research) were also flat Monday.

"My sense is that the market is not particularly surprised by the weakness in Morgan Stanley's preannouncement," said Christopher Bingaman, manager of the Diamond Hill Bank and Financial fund. "It's been pretty well forecast."

Bingaman pointed out that J.P. Morgan Chase already warned earlier this month that its trading results in the second quarter would be relatively lackluster.

Still, should investors be scared of more bad news ahead?

"Expectations for the brokers have turned somewhat more negative," said Frank Barkocy, director of research with Keefe Managers LLC, a hedge fund specializing in financial services companies. "We're not terribly excited about the near-term prospects for a lot of these stocks."

The problem for Morgan Stanley and other brokerages this quarter is that they are expected to post poor results from their proprietary trading operations, i.e. investments in the market they've made with their own money.

Analysts said that the sluggish performance of stocks in the second quarter due to renewed fears about high oil prices has probably hurt trading results. And the fact that long-term government bond rates have continued to fall despite increases in short-term rates also may have caused some pain since many big brokerage trading desks were apparently betting on bond prices to fall, which would have pushed yields higher.

"Treasury prices have been rising and oil is up and down," said Richard Bove, an analyst with Punk, Ziegel & Co. "So if you're a big trading firm, it doesn't matter what your name is. You probably lost a lot of money." (He doesn't own any of the stocks he follows and his firm has no banking relationships with them.)

But the recent weakness in the group could present some opportunities for investors to buy specific brokerage stocks. Barkocy said that while his firm has no position in any of the stocks currently, they might take a look if the group falls much further.

Bove said that Lehman Brothers may have recovered from stumbles in its trading business due to a strong quarter for its investment banking unit. He added that Bear Stearns shouldn't be hit too hard either because it does not do as much proprietary trading as other firms.

To that end, analysts expect Lehman to report a 10 percent increase in profits for the second quarter while Bear Stearns' profits are expected to drop just 5 percent from last year.

Goldman, by way of comparison, is expected to post a nearly 18 percent decline in earnings while Morgan Stanley's new guidance calls for a 15 percent to 20 percent drop in earnings from last year.

Bingaman owns Merrill Lynch and Citigroup in his fund. He said that Merrill Lynch in particular is attractive since it generates a significant portion of revenues from its retail brokerage unit, which makes it a little less volatile than other brokerages. Analysts expect Merrill Lynch to report a 7 percent increase in earnings in its second quarter.

Overall, Bove thinks that investors should take advantage of any dips in the stocks in the near future because he thinks it would be an overreaction. He thinks the group is on solid footing with most companies expected to report annual earnings increases in the mid-teens for the next few years.

"It's a huge mistake to sell brokerage stocks when they have a bad trading quarter. At least one quarter a year they'll get slammed because of trading. But earnings are still moving in the right direction," he said.

For more about Purcell stepping down at Morgan Stanley, click here.

For a look at more financial stocks, click here.