Morgan Stanley also booked losses from its investments in the IPO market, but M&A advisory and fixed income underwriting more than made up for the shortfall.
The big US banks largely beat subdued expectations in a quarter that was overshadowed by trade tensions and worries of an economic slowdown that forced the US Federal Reserve to cut interest rates twice.
"We delivered strong quarterly earnings despite the typical summer slowdown and volatile markets," Chief Executive Officer James Gorman said.
Gorman, however, added that he remained cautious given the ongoing trade talks between the United States and China and low interest rate environment.
Net income attributable to the company rose marginally to $2.17 billion, or $1.27 per share, in the quarter. Net revenue inched up to $10 billion from $9.9 billion.
Analysts were expecting a profit of $1.11 per share on revenue of $9.6 billion, according to IBES data from Refinitiv.
Overall sales and trading revenue rose 10%, driven mainly by a 21% jump in fixed-income sales and trading revenue.
Revenue from investment banking, which includes advising on deals and helping corporations raise money, rose 4.3% to $1.64 billion.