) --

Morgan Stanley

(MS) - Get Report

turned in impressive second-quarter earnings Tuesday, but the trading and investment banking businesses that drove the strong performance have little to do with James Gorman, who took over as the bank's CEO at the start of the year.

On the trading side, however, Morgan Stanley proved more agile than peers like

Goldman Sachs

(GS) - Get Report


Bank of America

(BAC) - Get Report


JPMorgan Chase

(JPM) - Get Report



(C) - Get Report

. Morgan Stanley said it gained market share by hiring new traders and salespeople, and that its avoidance of risk, a strategy that hurt it last year, proved to be the right approach in a tough second quarter.

Bernstein Research analyst Brad Hintz was also impressed that Morgan Stanley posted gains in both equity and fixed income underwriting versus the first quarter, despite a dearth of new offerings.

"Perhaps the speculation of Morgan Stanley's market share declines in investment banking just isn't there," Hintz told


in an interview.

Things were not so rosy, however, in wealth management-- the main area of Gorman's expertise.

While a 1% drop in revenues in global wealth management versus the first quarter is not too bad, the unit's pretax margins of 7% on Morgan are "dismal," Hintz said.

If the trend doesn't improve, it may be hard for Gorman to pin the blame on someone else. Gorman earned his stripes running Merrill Lynch's wealth management business before taking on a similar role at Morgan Stanley in 2006. His rise to the CEO post appeared inextricably linked to Morgan Stanley's acquisition of a majority stake in Citigroup's Smith Barney brokerage business last year.

"When you're investing in Morgan Stanley, you're investing in a bet on the integration of Dean Witter

Morgan Stanley's legacy brokerage business and Smith Barney into a new Merrill Lynch and the message I get from institutional investors regarding the Dean Witter Smith Barney bet is 'show me the money,'" Hintz says.

Analysts expressed some skepticism about the unit's performance on the conference call.

"It seems your targets for profit margins and net new assets could be at risk for this year and next year," said CLSA analyst Mike Mayo.

Morgan Stanley executives attributed much of the performance to market-related issues, however.

CFO Ruth Porat said that retail investors backed away from the market after the May 5 "flash crash," but Gorman expressed confidence things will change.

"The retail investor will not disappear forever. Of that I'm pretty sure; I've been doing this a long time," he said on the call.

Wealth management's performance was not the only area of concern in the quarter. Morgan Stanley management also drew fire for failing to disclose a

tax windfall

ahead of the report that accounted for one quarter of the earnings in the latest period.

Rochdale Securities analyst Dick Bove says he is a "big believer" in Gorman, however.

"He has a clearly defined strategy which he's now executing and unlike the prior managements he's not going to keep shifting it around," Bove says.

It's hard to imagine Gorman will face too much pressure if Morgan Stanley keeps turning in quarters as successful as this one, but the traders are unlikely to be able to carry the firm on their shoulders forever.


Written by Dan Freed in New York


Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.