Updated with latest share price, additional information.



) -- Shares of

Morgan Stanley

(MS) - Get Report

surged Wednesday after the bank handily beat Wall Street profit expectations as trading revenue held up better than anticipated.

The stock leapt nearly 9% to $27.36 in morning trades. Volume was already nearing 12 million less than an hour into the session. The issue's trailing three-month daily average volume is 19.5 million.

Before the opening bell, Morgan Stanley reported second-quarter earnings from continuing operations of $1.8 billion, or 80 cents a share. The latest results include a tax benefit of $345 million, or 20 cents a share, stemming from a reevaluation of tax reserves.

Revenue came in at $8 billion for the three months ended June 30, up from $5.2 billion in the same period a year earlier. Revenue from bank's Institutional Securities business, which houses its trading operations, totaled $4.5 billion for the quarter. Fixed income sales and trading revenue was $2.3 billion, down around 15% from $2.7 billion in the first quarter. Revenue from equities sales and trading was $1.4 billion, flat with its first-quarter total.

These declines were modest in comparison to those of main rival

Goldman Sachs

(GS) - Get Report

, which saw sequential declines of 40% for its FICC business and 50% for equities trading.

The average estimate of analysts polled by

Thomson Reuters

was for a profit of 46 cents a share in the June period on revenue of $7.93 billion.

Including discontinued operations, Morgan Stanley earned $1.09 a share, reflecting the impact of an after-tax gain of $514 million related to the sale of its retail asset management business.

"While markets were challenging this quarter, Morgan Stanley benefited from a deliberate and disciplined focus on execution," said James Gorman, the company's president and CEO, in a statement. "We strengthened leading market positions in our client-focused Investment Banking business, improved client flows in Sales and Trading, and continued progress on the integration of Morgan Stanley Smith Barney as well as the repositioning of our Asset Management business."

But Gorman sounded a note of caution going forward: "We still have a great deal of work to do across our global franchise and anticipate that the difficult market environment may continue in the months ahead."

Morgan Stanley shares closed Tuesday at $25.22, up.

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