DVA gains aside, which the company said "could reverse in future periods" the third-quarter results casts doubt on whether the investment bank will grow for the year compared with 2010. The results also show that while revenue contracts, earnings may stay strong. Nine months into the year, revenue is now on track to rise 10% and net income is set to rise 18% compared with last year -without the DVA gain, revenue would be close to flat for the year.

In a September Barclays Capital ( BCS) financial services conference, JPMorgan investment banking head Jes Staley said that the bank's trading business would fall 30% from the second quarter, when it registered a total of $5.39 billion in revenue, and that investment banking revenue would plummet roughly 50% to $1 billion.

The grim forecast proved to be overly pessimistic for now --and it was a reflection of a quarter when markets and deal volumes deteriorated as the possibility of a return to crisis grew with concerns over government indebtedness and the health of U.S. and European banks. In a research note after Staley's forecast, Barclays Capital analyst Jason Goldberg wrote, "we expect all major capital markets revenue categories to decline amid the U.S. debt-ceiling debate/credit downgrade, European financial concerns, falling global equity markets and heightened volatility."

In the third quarter, the S&P 500 index fell 14% and the MSCI World Index dropped 17%. Meanwhile, the VIX, a gauge of general risk aversion averaged 31 during the quarter, reflecting an almost doubling of fear from the second quarter's average level of 17. Currently the VIX is above 40, indicating that since the quarter ended, worries of a crisis haven't subsided entirely. The market's volatility has been even worse for banks. In the third quarter the KBW Bank Index ( BKX) fell over 25%.

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