Morgan Stanley misses earnings views as weak investment banking revenue offsets strong trading

• Morgan Stanley reported lower earnings per share, net income, and revenue in its second-quarter report.
• The results also missed forecasts, led by weakness in investment banking.

Morgan Stanley on Thursday reported declines in second-quarter earnings and revenue that also missed analysts' estimates, led by weakness in the investment banking business.

Here are the key numbers:

• Quarterly revenue: $13.13 billion vs. $13.48 billion predicted by Bloomberg analysts
• Diluted earnings per share: $1.39 vs. $1.53 analyst consensus
• Net income: $2.5 billion vs. $3 billion analyst consensus

The revenue and EPS results represented year-over-year declines of 11% and 25%, respectively.

Morgan Stanley stock fell 1.21% in pre-market trading Thursday to $74.98, and it is down roughly 24% so far this year.

"Overall the firm delivered a solid quarter in what was a more volatile market environment than we have seen for some time," CEO James Gorman said in a Thursday statement.

The quarterly results come as Wall Street's top firms have faced headwinds like soaring inflation, uncertain markets, and war in Ukraine. Investors are also increasingly anticipating a US recession. Earlier this year, Gorman warned that there's a 50% chance of a recession.

Meanwhile, the steep downturn in stocks during the quarter has weighed on IPOs and mergers that typically provide a key source of fee revenue for investment banks. But wild swings in the market also benefit trading revenue, which helped lift Morgan Stanley's first-quarter results.

In the second quarter, equity trading revenue grew 5% to $2.96 billion, and fixed income trading revenue jumped 49% to $2.5 billion.

Investment banking revenue declined 55% to $1.07 billion on lower levels of completed M&A transactions. Wealth management revenue slipped 6% to $5.7 billion.

Earlier on Thursday, JPMorgan Chase missed quarterly forecasts, and reported a 28% decline in its second-quarter profit.

Citigroup reports Friday, while Bank of America and Goldman Sachs are due to report on Monday.