Third quarter profits at Morgan Stanley (MS) dropped 9% from a year ago as revenue from investment banking and trading fell, another sign that Wall Street is still struggling to recover from a prolonged slump.

Investors signaled their disappointment, sending the firm's stock down roughly 7% Wednesday. That was its largest single-day drop in more than three years. In the last three months, the stock is down 13%, a steeper decline than all its big-bank peers.

Morgan Stanley's third quarter earnings result also ranked near the bottom of the big banks. Its drop in profit was smaller than the 33% decline at rival Goldman Sachs (GS) but it trailed profit jumps reported by JPMorgan (JPM), Bank of America (BAC), Wells Fargo (WFC), and Citigroup (C).

Its investment banking revenues fell 27% from a year ago, placing it last among the big banks with sizable Wall Street operations.

Investment banking fees at Goldman Sachs, Bank of America, and Citigroup all rose from a year ago. At JPMorgan, these fees fell by a much lesser degree — 2.6% — for the same period.

Morgan Stanley's revenue from trading stocks and bonds was also down, by 4%. Its wealth and investment management units both posted higher year-over-year profits but fell short of analyst expectations.

"While the market environment remained mixed this quarter, the firm delivered solid results," said CEO James Gorman, who in May announced plans to step down as leader "at some point in the next 12 months."

Gorman told analysts that he expects more activity to materialize in 2024. At the moment, Gorman said on a Wednesday morning conference call, "boards of directors are sitting there saying, until we understand the cost of financing, it is very difficult to pull the trigger on some of these capital transactions."

But when the Federal Reserve decides it has stopped raising interest rates, "the M&A and underwriting calendar will explode because there is enormous pent-up activity."

"I don't know if it's six months out or nine months out or it starts three months out, but this thing is going to start turning and then rates will be the kick when they start coming down."

"Unfortunately I’m not going to be around to enjoy it," he added.

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