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Goldman cuts Morgan Stanley, ups J.P. Morgan

NEW YORK (MarketWatch) -- In a research note issued Tuesday morning and titled "Swapping the Morgans," Goldman Sachs analysts pulled Morgan Stanley shares from their conviction buy list and replaced them on the list with shares of J.P. Morgan Chase & Co. . The analysts also cut their rating on Morgan Stanley to neutral. The analysts said that while both have underperformed the market this year, recent testimony in Congress from J.P. Morgan chief Jamie Dimon removed some concern about a drag on the shares from the recent high-profile trading loss. Meanwhile, the recent two-notch Moody's downgrade of Morgan Stanley's debt may linger as a problem for that firm, they said. Morgan Stanley shares dropped 1.3% in preopen trades, and J.P. Morgan shares added 1.1%.