Morgan Stanley reported a 7% drop in fiscal third-quarter net income, but easily topped Wall Street expectations, calming nerves after a tumultuous day that began with Goldman Sachs Group Inc., the only other remaining independent brokerage firm, reporting results that came in just above expectations.

"Despite unprecedented market conditions, Morgan Stanley's core client franchise achieved solid revenue growth, profitability and ROE this quarter," Morgan Stanley Chairman and Chief Executive John J. Mack said. "Our people delivered particularly strong performance across our prime brokerage, commodities, foreign exchange and equities businesses, and we saw continued growth in our international business. We have continued to actively reduce our legacy positions and carefully manage our risk, capital and liquidity."