Morgan Stanley has had difficulty with fixed-income trading for years, but the issues that affected the business in the latest quarter also shook most of its competitors.
Trading activity in the bond market slowed markedly during the period amid expectations the Federal Reserve would soon start to wind down its stimulative bond-buying program.
Goldman Sachs reported on Thursday that its revenue from FICC trading fell 44 percent in the quarter. Citigroup's fell 26 percent, Bank of America's 20 percent and JPMorgan Chase's 8 percent.
Revenue in Morgan Stanley's wealth management business increased 8 percent to $3.48 billion, while the business's pretax profit margin edged up to 19 percent, getting closer to Gorman's target of a minimum 20 percent.
Morgan Stanley completed its acquisition of brokerage Smith Barney from Citigroup in June. It now collects all of the earnings from the former joint venture but must wait until 2015 to accrue all of Smith Barney's client deposits.
(Read more: Did Wall Street make the next budget crisis worse?)
Shares of Morgan Stanley moved higher in pre-market trading immediately following the report. (Click here to get the latest quote.)
—By Reuters. CNBC contributed to this report.