Morgan Stanley said first-quarter profit dropped nearly 50 percent, hurt by a decline in fixed income trading revenue. The investment bank and brokerage posted net income for shareholders of $736 million, or 50 cents per share, down from $1.411 billion, or 99 cents per share, in the same quarter last year.

Following is a selection of initial comments by analysts:

KEITH BOWMAN, EQUITY ANALYST, HARGREAVES LANSDOWN, LONDON

The results are reasonably good. What we are seeing is the continuation of the recent trend of surpassing expectations. It's another tick as far as markets are concerned. We are certainly seeing some return to normality. However, expectations going forward are still difficult. Certainly increased cost of regulation is expected to have some drag on future earnings.

DAVID MORRISON, MARKET STRATEGIST, GFT GLOBAL MARKETS, LONDON

Morgan Stanley earnings look to have beaten forecasts, and the shares have responded, but overall the banks' reporting season has been a bit of a mixed bag, with the sector lagging the tech sector as the big driver.

KEITH DAVIS, ANALYST, FARR, MILLER & WASHINGTON, WASHINGTON, D.C.

Last year, the first quarter was extraordinary, maybe the best ever for trading, and no one was expecting anyone to repeat that kind of performance this year. So just to look year-over-year is not a good comparison. I think it's better to look at the results compared with the fourth quarter. Fourth quarter was pretty weak from a trading perspective and pretty much everyone posted strong results sequentially. I wouldn't glean much from the year over year comparison.

PETER CARDILLO, CHIEF MARKET ECONOMIST, AVALON PARTNERS, NEW YORK

The results are a good indication that corporate America feels strong enough. They are supporting the market to move higher and it looks like the stock market rally will continue going into next week.

(Reporting by Jon Hopkins and Atul Prakashin London and Clare Baldwin and Dan Wilchins in New York)